May 01

Gold in Head-and-Shoulders Top Formation

by Mike Paulenoff, Tue May 1st, 2007

The streetTRACKS Gold Shares (NYSE: GLD) has done a round-trip off of last Thursday's pivot low at 66.50, which now represents key near-term support. We can make the case that all of the action carved-out during the past month represents a head-and-shoulders top formation. If the neckline support level breaks 66.50, I will get an optimal downside follow-through target of 65. However, let's also keep in mind that the sharply rising 50 DMN at 66.15 suggests strongly that a break of the "neckline" at 66.50 could find scant downside follow-through, and instead might be the next excellent buying opportunity within the larger intermediate-term bull trend. In any case, the next several trading hours in the GLD will be critical to its near-term trend direction.
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Mike Paulenoff is author of www.MPTrader.com, a real-time diary of his technical analysis & trade alerts on ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international markets, plus key ETF component stocks in sectors like technology, mining, and banking. Sign up for a Free 15-day Trial!