SPDR Gold Shares (GLD) has been in a bear market cycle since January, but Fairlead Strategies' Katie Stockton sees improving momentum. She says a counter-trend rally may be forthcoming, with resistance in the $405-$410 zone.
Katie Stockton of Fairlead Strategies says GLD has been in a bear market cycle since peaking in January, yet improving momentum suggests a significant counter-trend rally may be forthcoming. Her technical read supports a rebound within the context of the existing downtrend.
GLD has stabilized above support near $360, defined by previous lows, which Stockton describes as a potential base for a recovery. Initial resistance sits in the $405-$410 zone, defined by the weekly cloud model and the 200-day moving average.
Short-term momentum has improved because of a new daily MACD buy signal, which Stockton calls a catalyst for a rebound toward resistance 7%+ above. The signal follows a brief breakdown below support that failed to confirm, which suggests a shakeout, or false breakdown, has occurred.
With upside follow-through, the weekly stochastic oscillator is poised to turn higher from oversold territory. That would give early evidence of an intermediate-term low in GLD, aligned with the price action in gold futures.
Gold also gains ground against equities in her analysis. The ratio of GLD to the SPDR S&P 500 ETF Trust (SPY) is turning higher from support, and improved momentum behind GLD versus SPY supports outperformance by gold over U.S. equities.
Source: CNBC
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