Medium term
Trade view / 22 September 2016 at 7:50 GMT

Gold ETF rallies in wake of BoJ, Fed

Trader /
United States

Gold as represented by the popular GLD ETF rallied 1.46% yesterday following a no-hike decision by the Fed and a new attempt at yield curve control by the Bank of Japan. While most risk assets (except for the USD) lifted on Wednesday, the rally in gold, silver, and gold miners for that matter looks promising for continuation at least in the near-term.

When I last offered a trade idea on GLD on September 5 with a price target near $129, the upside target was reached the very next day. Since then we have witnessed some consolidation in gold, which now may be over.

For perspective, below is the multi-year weekly chart of GLD, which shows that the ETF has been consolidating below a longer-term diagonal resistance line since June. At the same time, GLD has held its support line from late 2015, which until further notice and all else being equal does favour an eventual break higher and the longer-standing diagonal resistance line.

Gold ETF - GLD

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Source: Saxo Bank

On the daily chart we see that the support line since late 2015 has also been coinciding with the blue 100-day simple moving average. In other words, a confluence zone of support below the market, i.e. currently around $125, is building. 

The breakaway gap that GLD staged on Wednesday does support the thesis of another try at the $129 level on the upside as a first and next target.

Gold ETF - GLD
Source: Saxo Bank

Management and risk description

Given the technical confluence support area around $125, any break below there, particularly on a daily closing basis, is best honoured as a stop-loss signal.


Entry: buy the GLD or CFD thereof at $127 or higher.

Stop: $125.

Target: $129, followed by $130 and $131.

Time horizon: one to three weeks.

— Edited by Michael McKenna

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Non-independent investment research disclaimer applies. Read more


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