Strategic trade
Trade view / 25 August 2016 at 8:35 GMT

UPDATE: Gold trend unchanged despite Wednesday dip

Trader /
United States

On August 11 I detailed a trade view stating that the primary year-to-date trend in gold as represented by the popular SPDR Gold ETF (GLD) (GLD:arcx) remains intact. While this trend is unchanged, Wednesday's selling pressure in the yellow metal does warrant an update.

On Wednesday the GLD etf dropped 1.11% and violated a first and near-term technical support area while gold miners as represented by the GDX etf, which some traders use as a levered proxy to trading gold got clobbered to the tune of 7%. This now begs the question as to what this move may say about Janet Yellen's statements on the state of interest rates on Friday. Could she sound more hawkish than what many on Wall Street expect?

Despite the selling pressure in gold and gold miners on Wednesday, the bigger picture for the GLD etf remains unchanged from August 11. This is to say that the breakout of the multi-year down-trend is still unharmed and through a multi-week/month lens the yellow metal remains in a consolidation phase. Through this lens, buying the dip in gold, but only upon a bullish reversal, still makes sense.

Source: eSignal

On the daily chart we see that Wednesday's dip in gold not only broke it out of a tight multi-week trading range but also violated the yellow 50-day simple moving average for the first time since May as gold fell to a one-month low. At the same time, gold does remain in its multi-month consolidation phase (blue box) and so far is also holding its diagonal support line.
The key here now is not to blindly buy the GLD just because it broke to the bottom end of its trading range but rather to wait for signs of seller exhaustion and visibly clear signs of buying, i.e. a bullish reversal day or week.

Source: eSignal

Management and risk description

Since a breakout above $130 on a daily closing basis since my posting of this idea on August 11 never occurred and thus never triggered a long-side trade in the GLD, I am now on watch for bullish reversals as a signal to possibly get long the GLD. Patience is a virtue as is a sound risk management process.


Entry: Buy the GLD etf or CFD thereof upon the next notable bullish reversal, i.e. bullish daily or weekly candle

Stop: A break below $123 and the blue 100-day moving average

Target: $135

Time horizon: 1–3 months

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
25 August
Georgio Stoev Georgio Stoev
It looks that way!
Traders can also consider using selling options if mildly bullish on gold on GCV6 1320/1315 put spread or GLD 23 Sep 125/123 put spread that produces $0.70 credit
25 August
Serge Berger Serge Berger
Agreed, although personally I would like to see some sort of bullish reversal first before slathering on short put spreads.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail