Gold and gold mining stocks have become the talk of the trading world these days. Recently, gold has moved in parabolic fashion on the charts. The popular SPDR Gold Trust (GLD) traded as high as $194.44 on August 8th, 2020. Since that pivot top in the GLD, it has pulled back below the $180.00 level before bouncing and making a possible lower high.
At this time, it appears that the GLD could be forming a zig-zag down pattern on the charts. Another name for a zig-zag down pattern is an A-B-C pattern. It is basically a down move followed by a bounce up that makes a lower high on the charts. The next move for this pattern is another down below the last pivot. If this pattern plays out it will signal very strong daily chart support around the $171.00 level. Traders should note that this support area is where the GLD broke out in mid-July 2020. Often, prior break-out levels will serve as solid support when tested. Therefore, the $171.00 area is a level where I would become interested in trading the GLD to the long side.
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