Gold Chart (GLD) – At Potential Support

I charted the gold ETF, GLD, after the markets closed on Wednesday, December 15, 2009 when it finished the day at $110.21.  GLD is sitting at potential support by a few measures, but that doesn’t make this the right time to buy into the yellow metal yet necessarily.  GLD found support just above its 50 day moving average, but yesterday the 10 and 20 day moving averages show a bearish crossover.  If this doesn’t snap back soon, GLD could have more room to move south. 

Three trend lines stand out for GLD.  The lowest is the trend line of higher lows.  This line hasn’t broken yet and it’s key for the bulls to see it hold to stay invested.  A break below that line could mean a much deeper fall.  Just above that line and still holding support is a line that is debatable if it’s worth watching.  This line is a combination of previous highs and lows.   It’s holding now and could develop into a line to pay more attention to in the near future.  The third trend line was the line of lower highs that just broke.  Seeing a stop to the nose dive of a fall was big.  The biggest play for GLD in the near term could be more sideways movement, at least until the 50 day moving average ticks higher and/or the trend line of higher lows that started in August catches up.    Next stop lower could be the $105 area, then closer to $100, based on the highs and lows of October.

I won’t feel comfortable calling for a buy until I see Williams %R indicator move above oversold.  I marked the previous few times it’s made that move out of the bottom of its range and each time spelled a move higher for at least few weeks after.