GLD Next Set-Up

We had been looking for a pullback in Gold/GLD which has taken place or is still underway, but I believe it's getting close enough now that it's time to start looking at the next set-up as the trade comes to us rather than chasing it. For any gold shorts out there, you likely have more time, but probably not too much more upside in the short or better put, the upside that remains, may not be worth the volatility, I'll include a Trend Channel stop.

 This is the longer term daily chart of GLD, although it's a bearish looking descending triangle, the price pattern is too large to be a real descending triangle consolidation/continuation pattern, I think it's more likely this is a longer term base that has been forming, but we'll leave plenty of room for the market to tell us when we get there. Inflation expectations are going to have to see a drastic change in expectations if gold is to lift off.

 Here's the pullback we were calling for. Just for perspective, look how many days within the downtrend that it seemed GLD was doing nothing (2 trading weeks). Sometimes we expect things to happen much quicker than they do, especially if you watch the market all day every day, but if I remove that yellow box you'd likely only see a downtrend.

 Here's the 3C pullback signal we got in January and the pullback, but you've probably noticed a positive divergence "building", it's not complete, but it is suggesting that GLD is going to look for a bottom and start a reversal process sooner than later, thus my reason for tightening stops for GLD/gold shorts on the pullback.

In buying a pullback we always look for a "Constructive" pullback, that means it can be there for numerous reasons like strengthening an already large/strong base, but we HAVE TO SEE ACCUMULATION OF LOWER PRICES, that's the real judge of whether the pullback is constructive and worth looking at for a purchase at lower prices and lower risk.

The intraday charts are showing accumulation taking place and accruing on the longer term charts like the 10-15 min charts.

 However there's no reversal process (rounding or "W" bottom) in place and the 5 min chart is not positive, these should materialize before we enter a long position and shorts will probably want to be out of the position by then if for no other reason than it's dead money.

If you look at the second chart (daily) you'll see we are approaching a support area, there may be a head fake/stop run below that, we'll have a better idea as we get closer, if there is, I may prefer a call position as the calls can be had on the cheap.

For current GLD shorts, this is a bit of a wide Trend Channel stop, but it's on a daily/closing basis and it will lock in additional gains before price can cross it which now stands at $118.90 and locking in about an additional $.50 a day (likely $118.40 tomorrow).

So we'll look for the reversal process, but GLD has already shown accumulation so I suspect this one will come to us at better prices and much lower risk, you might want to set some price alerts near long term support.