Gold Turns Constructive After Third Week of Correction

Gold found support exactly where it was supposed to this morning:


Gold (Daily)


The confluence of the rising 50-day simple moving average, the lower 2-standard deviation Bollinger Band, a key pivot point ($1212), and good old fashioned support turned out to be enough to turn the tide after gold was down ~2% at the lows this morning.

After today’s session gold bulls have some positive things to work with heading into next week:

  • Clear evidence that there is solid support between $1200 and $1210
  • Gold has spent the last three weeks ‘correcting’ by both time and price (~6%) and any of the overbought conditions that existed in February and early March have fully dissipated
  • The US Dollar Index is hanging on by a thread; even after today’s relatively strong U.S. monthly employment data the dollar couldn’t muster much of a rally



Below ~93 the dollar could fall very far, very fast. 

  • The Commitments of Traders data is beginning to offer a bullish flavor despite being at relatively extreme levels of speculative net length and commercial net shorts


While it’s not great news for bulls that gold futures speculators are at multi-year highs in net length while commercials are on the other side of this trade, the fact is that gold has digested this relatively extreme positioning in a constructive manner for the last month. Moreover, high levels of speculative length/commercial shorts are characteristic of longer term bullish trends in gold. Supported by the weight of significantly bullish technical factors there is a good chance that we are seeing the initial stages of a bullish paradigm shift in gold futures positioning.

In the ‘Trading Lab’ at CEO.CA we initiated a trading long position in GLD near the lows this morning:




To follow this trade and get all of our other alerts, signals, and market analysis you can subscribe to CEO Technician Premium today using the button below!

CEO Technician Premium Subscription Options