GLD Update

There are a couple of competing themes in GLD/gold, 1) a possible primary trend bubble, 2) a short term decline 3) a possible intermediate bullish trend. This may sound counter-intuitive, but there are at least 4 major trend classifications and each can be different at the same time, for instance we may have a primary downtrend with a bear market rally that registers a sub-intermediate up trend, but within the bear market rally a pullback of a week or so, giving us a short term downtrend, so various trends can all play out at the same time on different timeframes. I have had a feeling for a while that gold's primary or intermediate trend was changing and possibly a bubble. It definitely changed in that the former solid uptrend was halted and at best the primary trend is lateral.

Gold use to be very closely correlated (inversely) to the dollar, for a while it acted as a risk on asset, and for some time as a flight to safety, it now seems to be driven by QE sentiment as gold has a lot to gain from dollar debasing.

Lets take a look at the recent charts without going in to full scale analysis of gold's primary trend as I just don't think there's enough information (or there are some changing charts) to make a determination there.

 Here's the recent bearish descending triangle that implies a continuation of the downtrend, it is within this triangle we found a strong positive divergence at the lows and GLD shortly after (2 days) saw it's largest 1-day gain in about 3 years, once again putting the squeeze of technical traders expecting a break down from the triangle. However at the yellow arrow I have suspected this failed move may in fact be a precursor to a downside reversal, GLD is at resistance right now.

 GLD's opening trade, it quickly backed off resistance on the open and rallied back up to the level this morning.

 The 1 min chart shows a negative divergence on the open, a small positive on the a.m. pullback to the lows and then confirmation of the move back up to resistance where another negative divergence set in.

 In trying to reduce noise and uncover the trend, I'm using a 15 min chart, you can see the breakout from the bearish price pattern to the left and in yellow the area I suspect was a head fake failed breakout as 3C is negative on that move, it is also negative as GLD approaches the same area of resistance.

 On an hourly chart we see much the same, a spectacular positive divergence in the bearish price pattern on the 30th that sent GLD higher and then a negative divergence at the point I think is suspect, also a current negative divergence. It would seem to me GLD may have upside capped in the near term, however...

This support area on a daily chart that has seen several positive divergences including the last one on the 30th, may be a feature we need to watch as 3C daily looks a bit stronger here. I'm wondering if we might see a move that breaks just below that support level and puts together an intermediate uptrend or sub-intermediate uptrend. The jury is still out on that, we'll have to first see what the local price action does, but it looks like it wants to back off and maybe test that support area, which at this point is becoming so obvious that a head fake move is almost certain.

The long trade on the 30th is the last good signal I see in GLD worth trading and I believe at this point, that trade is over.