GLD Update

This is a follow up from yesterday's GLD update as there' a potential trade here, make sure to see yesterday's post if you are interested in a potential GLD trade.

 This is a long term chart of TSV (TSV 55), TSV is a money flow/divergence indicator like 3C, but is usually used in shorter time periods like 10, 18, 28 and 38; I prefer to use time periods that few others look at and that reduce noise to uncover the trend. TSV did a decent job identifying the top in retrospect, I think 3C did a much better job in clearly identifying the top. TSV did do a good job identifying the bottom in December, which as I mentioned yesterday would have been around the same time Paulson would have been dumping GLD (one of his top 5 positions and the only of the 5 that was profitable on the year) to meet redemptions in January, I do think the GLD bounce had something to do with redemptions as hedge funds sold the physical and ETF to meet redemptions as they had a horrible year and there was already a trend of money flowing out of the market regardless of fund performance. This would have left a lot of gold/GLD supply at low prices and easily accumulated. The current break above the channel is just at zero in TSV which would be neutral, but would be taken negative as it did not show accumulation on the move up or at the break above the channel.

 Short term 3C this morning is slightly negative, the break above the channel shows a much clearer negative divergence.

 It may be early for any good readings from the 5 min chart, but not much has changed there. We are looking for signs that GLD is either being accumulated and therefore a potential long or as we have seen thus far, shows continued distribution which would give us a low risk head fake short entry. This could happen today or in a days, but it's close to tipping its hand one way or the other.

 The Australian Dollar which has the highest correlation to gold and as I demonstrated in yesterday's post, has been a leading forecasting indicator for gold's direction, continues to show a negative divergence on the 15 min chart and has moved lower today thus far.

Since FXA (Australian Dollar) is a leading indication for gold, I decided to take a closer look at FXA (its ETF) to see if there were any clues as to where it is going, essentially getting a head start on even the FXA signal.

 As you can see, FXA broke down below support and is rounding over, for reason I will show you, I don't think this is a consolidation, but rather a reversal.

 Using the Trend Channel which has held the entire move up since mid-December, there was a stop out  about 8 days ago, the channel has turned lateral and looks to be turning down now. If this were a swing trade, FXA would already be a short.

 This hourly 3C chart of FXA is why I believe this is a reversal and not a consolidation, I pointed out the relative negative divergence, but the leading negative divergence is quite clear and this is a long and important timeframe so the distribution signal here is VERY strong.

 The 15 min chart's signal is even stronger because we see underlying moves on shorter timeframes first as they bleed in to the longer term charts if they are strong enough.

Intraday, there's a relative positive divergence in FXA, but only on a 1 min chart, this could be a consolidation or perhaps an intraday bounce, but thus far it is contained to a 1 min chart and thus not very strong.

After looking at these charts, I would say the probability of yesterday's move in GLD being a head fake/shakeout move, has increased.