By: Scott Redler of T3Live
With the market dropping fast and fear rampant over the past couple weeks, gold has continued to be a safe haven, making new all-time highs. Central banks, especially China, who are losing confidence in global currencies, especially the dollar, are buying gold aggressively for safe-keeping. While it’s tough to be a buyer of GLD here, I still expect significant upside due to continued demand.
Gold has traded very well technically on its dramatic rise over the past few years. The first pattern was “the wedge” that broke in December 2008, which gave you the first to the Reverse Head and Shoulders pattern forming in GLD. The Reverse Head and Shoulders, which is a bottoming pattern, triggered in October 2009, and never violated the breakout showing commitment to the long.
After the first big move from the $90 level to $120 level, in the summer of 2010, GLD created a clean Cup and Handle Pattern, which triggers a move for higher prices.
Now in 2011, GLD has given two breakout trades as it consolidated for a few months in a long channel, to make a move into new highs. The last entry was a break above $154 in July 2011. It looks like GLD is in the last stage of a parabolic move up to the $2000 mark.
A lot of people are looking for reasons as to why gold continues higher, but sometimes it is as easy as a breakdown of technical analysis, which T3Live prides itself on. In the last 3 years since GLD came on our radar, there have been some strategic buy and hold strategies along with some short-term cash flow opportunities, as traders can take advantage of trading around their potential macro positions.
This is a weekly chart of GLD that outlines the technical patterns that has triggered GLD to go higher.
Below are my links from CNBC about gold, where I have been bullish since 2008, initially predicting gold should see $1500 back when it was priced at $850.
This was back from 2008 when I first made the call with Marc Haines and Erin Burnett.
Below is where gold already had the move up to $1200+ and we gave a strategy to buy the dip.
There are about 10+ more segments that I’ve talked about the move with targets of $1700-1800 and perhaps $2000+ if worst case type scenarios unfold. We are now in that extention phase that makes it hard to buy (we don’t chase at this end of a pattern), but every sale so far has been a bad on.
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