Possible GLD ScenariosFirst things first, all time highs are bullish. Let’s not forget that! When looking at GLD, that is the first thing I notice. Let’s have a look at the chart:
When a new all time high is reached, I like to use the Fib extension tool to pick some possible upside targets. Gold has formed a huge base of the cup and it looks to be forming a possible cup and handle.
For scenario 1, GLD goes to the 161% extension. The MACD is trending bullish on the monthly so this case is still a possibility. The RSI is really high at around 80. The RSI never stays around 80 for too long without pulling back. If we see this bounce off the 60 or 70 mark, the 161% extension looks very possible.
If the trend continues bullish, a logical resistance area is the 127% extension. The RSI would still need to hold round 60 to 70 for this scenario as well. If we fail here, I imagine we will put in our handle formation. Good re-entry points for the handle would be the 50% or the 61% retracements.
Scenario 3 is a near term failure. the targets here would also be the 50% and the 61% retracement levels. For this scenario, as long as the RSI stays above 40, the trend will continue upwards and the massive cup and handle will have formed.
Happy Trading!
