Gold futures rallied nearly $200 since the Monday open, hitting $1698 Tuesday morning. Is this rally the real deal or just a suckers rebound?
As a CMT, I search for clues. I turn to gold and gold miners, in this case, GLD and GDX. I watch to see how prices react around certain levels. One of my favorite tools is price gaps.
Gaps in price (up or down) signal emotional stress point for traders. Consequently, they become key support and resistance levels. Gaps can attract and repel price.
Both GLD and GDX are testing key gap levels today. What happens next will provide essential information about gold’s future. Will prices breakout to fresh highs, or will this rally fade at the gaps and turn quickly lower? We should have our answer within the next 48-72 hours.
The current spike higher closed the 154 down-gap from 2-weeks ago. Remember, the closing of gaps is a priority during a rebound (the gap acts as a magnet).
The gold mining ETF is testing a major gap area between $24.50 – $25.50. To me, this is the line in the sand. Progressive closes above $25.50 would support a V-shaped recovery in precious metals, and we could go higher. Failing to close progressively above $25.50 over the next few days back down and a cycle bottom sometime in May.
AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit https://goldpredict.com/
AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle that will begin to unravel in 2020.