Stock Chart Analysis GLD

Posted by downtowntrader | 10/08/2009 11:18:00 PM View Comments

Stock Chart Analysis GLD
SPDR Gold Trust (ETF) (Public, NYSE:GLD)

I posted this chart on the other night and mentioned it had the sausage link pattern setting up. This is a simple reference to how the bollinger bands resemble sausage links when a stock is trending strongly. Basically the bands expand as the stock rallies and contract as it consolidates. Often, the bollinger bands looks very messy and loose when a stock is in a trading range, but once a stock starts a trend move, the bands begin to take a better shape. While this isn't technically a trade setup, it is a clue that GLD may be in the early stages of a breakout.

Another clue on this chart is how RSI is confirming the new highs in price with a move to the highs in the indicator. This again, is not a trade setup, but another clue that the chart is looking healthy. However, the most important factor in this chart is that GLD has decisively cleared a very large trading range. Price action is always the first thing we should look at as traders, and GLD has just rallied to new highs clearing resistance that has held for over a year. While there is always a chance of a bear trap, especially when it seems everyone believes in the breakout, at this point the benefit of the doubt has to go with the bulls.

Related Post:

Free Video on Trading GLD

Trading Ideas based on Gold rally continuing:

Yamana Gold Inc. (USA) (Public, NYSE:AUY)
Goldcorp Inc. (USA) (Public, NYSE:GG)
IAMGOLD Corporation (USA) (Public, NYSE:IAG)
Royal Gold, Inc. (Public, NASDAQ:RGLD)
Agnico-Eagle Mines Limited (USA) (Public, NYSE:AEM)
Newmont Mining Corporation (Public, NYSE:NEM)

Good Trading,


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