Gold is Quietly Breaking Out
- Posted by JC Parets
- on September 6th, 2012
It feels like just a month ago that everyone had forgotten about what is possibly the strongest asset on earth. Tough to name many things that are sitting at or near their all-time highs. We put out a note at the end of July about how the yellow metal loses its sex appeal when it doesn’t do anything for a while. And that’s precisely the time that we should pay a little bit more attention.
At the time, the risk/reward was right up our alley. We said that if we started to break below 150 on the $GLD that we would get much more cautious. But that as long as it held, it seemed like a good entry point. Well, over the last couple of weeks, precious metals have been on a tear and $GLD has now broken above it’s downtrend line from last year’s nominal all-time highs.
This isn’t really complicated analysis. You guys that know me and read the blog know that I’m a pretty keep it simple stupid kind of guy. And that seems to work best for me. This is your basic support/resistance and trendline analysis. But when we add some momentum into the picture, our Relative Strength Index confirms the price action. RSI in the $GLD weekly chart has maintained its bullish mode and held onto the key 40 support level throughout the summer.
Gold looks solid here guys. I think 180 is in the cards and potentially much more after that. But let’s cross that bridge when we get to it.
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
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