Massive Gap Closure in Gold But Upside May Be Limited

A massive move has taken place in gold in the last few days from its low after the recent plunge to close the gap left open on Monday two weeks ago. Any upside appears to be limited at this point by a few important resistance levels.

GLD_20130429

It may be seen that the gap in GLD was closed exactly two days ago at $143.43 and this level has also turned to short-term resistance. Any upside is severely limited by the down-trendline and the horizontal resistance line that meet at $148.27. At the same time, the decline of Friday, April 12, 2013, shown as a huge red candle, restrains any further upside because it reminds to buyers at that time what followed next. Maybe this market will try to lure in as many bulls as possible to get the fuel for another leg down.

Conservative equity investors and inexperienced equity traders should be aware of the fact that GLD is not a regular stock but a financialized commodity and should not expected it to behave in familiar ways. The future of this market – actually more of a probability game than a market in the regular sense- will depend on several known and unknown factors that may take years to resolve while the underline pays no dividends.

Disclosure: no relevant position at the time of this post and no plans to initiate any positions within the next 72 hours.. 

Charts created with AmiBroker – advanced charting and technical analysis software. http://www.amibroker.com/ 

Disclaimer

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