With gold’s weakness after the QE4 announcement from the Fed last week, what is the chart saying about gold’s next move?
Here is the 3 year chart of GLD with its 50 (pink) and 200 day (black) moving averages:
The commodity has basically been stuck in a range for the past year. However, in that time, the overall longer-term trend has shifted from quite bullish (stock in a steady uptrend, above upward sloping 50 and 200 day moving averages for most of mid-2009 to mid-2011) to essentially neutral now.
Gold has risen year-over-year for 12 straight years, which is quite a performance for any asset. During that time, the 200 day moving average has been flat to downward sloping during only 2 brief periods: the first, in the second half of 2008; and the second, during 2012, though it is now essentially flat. Even the 50 day moving average has rarely been downward sloping for more than a few months.
With the 50 day ma downward sloping, and the 200 day ma flat, the long gold trade does not look like a good entry here. The 160-161 area in GLD should offer some support, but there is plenty of upside supply above 165 as well. Pretty much the definition of no man’s land for now.