Gold Chart (GLD) – Near Top of Trading Channel

I charted GLD, a major gold ETF this morning before the markets opened.  Yesterday GLD closed at $97.43 after topping out at $98.64.  The two parts of the GLD chart that stand out most to me are that GLD couldn’t break above its intraday high from February and that it’s close to the top of its trading channel.  Faltering before getting above the highs of seven months ago shows me that this rally could have done all it can do for now.  Trading near its trend line of higher highs tells me there’s probably more downside risk than upside potential for GLD at these levels.

Even though they aren’t in play right now, I left the 50, 100 and 200 day moving averages on the chart to show how fast GLD has moved away from its previous levels.  Even the 10 day moving average (not shown) is down near $95.  I expect a little more of a pull back in GLD before it moves much higher.  Even letting it touch the middle trend line that was a level of higher highs could be a better entry point as it could become support on the next encounter.  At a minimum, the $93 range looks like a better entry point since it’s closer to the 50 and 100 day moving averages and the trend line of higher lows.  With so many people bullish on gold right now, there might not be too many buyers left and when GLD turns it’ll probably move down quickly.

For those paying attention, this post went live at 9:09 on 9/9/09.  I know, what a dork.