Gold has broken down and double digits is a real threat for the precious metal in the near future. A quick glance at the 52 week chart tells the whole story. You can see where the bears forced GLD down to $115 all the way from the $130 range starting way back in mid July. The return to $120 was nothing more than a predictable short covering rally. Once it was completed the bulls were looking for another fall back to the $115 level, and they got it to the penny on Thursday. That was the decision point. If GLD could have rallied back above $120 it would have put in a double bottom and confirmed a bullish W formation. Instead GLD gaped down three dollars on Friday and now hovers ominously below old support of $115.
Pay no attention to the stochastics, GLD has broken down. The best that can be hoped for is a minor bounce back to it's new resistance of $115, before heading back down to new lows. If we do get the bounce to $115 that would be a good place to open a short on GLD.
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