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by Arthur Hill
After returning to broken resistance with a sharp decline in July, the streetTRACKS Gold ETF formed a small consolidation, and there is a big test at hand.
Position: Hold
Arthur Hill
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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CONSOLID FORMATION
Gold Tests The Breakout
07/29/08 09:18:20 AMby Arthur Hill
After returning to broken resistance with a sharp decline in July, the streetTRACKS Gold ETF formed a small consolidation, and there is a big test at hand.
Position: Hold
| Figure 1 shows the streetTRACKS Gold ETF (GLD) over the last five months. The ETF firmed in the mid-80s from late April to early June and then broke resistance with a surge in late June. The breakout featured a gap, a trendline break, and a move above the early June highs. This powerful breakout carried GLD above 95. |
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| FIGURE 1: GLD, DAILY. This ETF firmed in the late 80s from late April to early June and then broke resistance with a surge in late June. |
| Graphic provided by: TeleChart2007. |
| |
| After becoming overbought in mid-July, GLD stalled and then declined with a sharp pullback. Despite such a sharp decline, the ETF is finding support near broken resistance around 90. This is the moment of truth for gold. A successful best would keep the June breakout alive and uptrend in play. Failure to hold support would negate the breakout and argue for a test of the May–June lows. |
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| FIGURE 2: GLD, 30-MINUTES. Here, GLD broke support with a sharp decline in July and then firmed in the low 90s. |
| Graphic provided by: TeleChart2007. |
| |
| For an expanded view of the three-day consolidation, I am looking at a 30-minute candlestick chart. GLD broke support with a sharp decline in July and then firmed in the low 90s. The slight advance over the last few days looks like a rising flag, which is potentially bearish. Flags are corrective patterns that slope opposite the bigger trend. A bearish flag slopes up and a bullish flag slopes down. This rising flag looks like a corrective rally to alleviate short-term oversold conditions. A break below flag support would signal a continuation of the prior decline. |
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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Date: 07/30/08Rank: 4Comment:
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