Following The Breakout In Gold Into Key Price Levels (GLD, IAU, PHYS, SGOL, DZZ)
Corey Rosenbloom: We’ve been anticipating a breakout in gold prices, and the last few weeks have delivered the likely upside break into the initial target.
Let’s update the Daily and Weekly chart and note the key level that price may be breaking again to the upside.
Here’s the bigger picture Weekly Update:
On the Weekly Structure, price has been consolidating or retracing in the form of a Descending Triangle or Flag with a Horizontal Base at $1,550.
After months of clear support off the $1,525/$1,550 level, buyers finally broke the recent stalemate which has resulted in an initial impulse breakout above the falling trendline and weekly EMA wall of resistance near $1,620.
As was the case, we were looking for a movement up into the $1,700 level as the first target which was a simple “Round Number” resistance and prior price high level.
With that move complete, the new game-plan calls for additional breakout/impulse (upward movement) on a firm breakthrough above $1,700 which could track toward the March 2012 and November 2011 reversal high near $1,800.
The Daily Chart also gives additional insights into the strength of the breakout and importance of $1,700:
Not only did price consolidate between the $1,540 support and declining trendline resistance, but from June to August 2012, price compressed even tighter within a Symmetrical Triangle and then new resistance level at $1,630.
The initial trendline break (first buy signal) triggered in late July with an accompanying increase in volume, yet price failed to break $1,630 until the second breakout (second buy) above $1,630 in late August.
The second break also occurred on higher relative volume which did result in the anticipated impulse higher. GET A FREE TREND ANALYSIS FOR ANY STOCK HERE!
The recent move was a mini-bull flag which also developed an upside impulse on higher volume.
The key now for short-term and intraday gold traders hinges on how price reacts to the new $1,700 level.
Open Air (no major/obvious resistance) exists above $1,700 and it will be important – at least now on this morning’s break – to monitor against any Bull Trap that may trigger on a movement back under $1,700.
Here’s the intraday (15-min) pure price chart with a focus on $1,700:
After August 31’st continuation (daily chart mini-bull flag) impulse, price stagnated logically into the $1,700 initial target zone.
After three days of consolidation (more compression), price broke into an initial impulse move higher overnight. GET A FREE TREND ANALYSIS FOR ANY STOCK HERE!
In the upcoming sessions, monitor gold with the potential for further upside continuation against the possibility for a Bull Trap that may trigger on a ’surprise’ move back under $1,700 and especially the new short-term support shelf (trendline) above $1,690.
Related Tickers: SPDR Gold Trust (NYSEARCA:GLD), iShares Gold Trust (NYSEARCA:IAU), Sprott Physical Gold Trust (NYSEARCA:PHYS), ETFS Gold Trust (NYSEARCA:SGOL), PowerShares DB Gold Double Short ETN (NYSEARCA:DZZ).
My name is Corey Rosenbloom, CMT (Chartered Market Technician) trader, educator, analyst, and I am excited to share with you my experiences studying and trading the markets and to hear from you regarding your experiences, challenges, and frustrations, and successes. My goal is to create a community dedicated to reaching out to those who have been burned by the market or are anxious about risking their money to make money in the stock, options, or futures markets. Together, we can share strategies and learn how to overcome crippling fears that keep us from achieving our highest potential.