The movment in gold and related stocks was all over the news Friday. Friday’s gains finds thatÂ a wide range of gold and gold mining stocks are hitting the top of their declining channels, or are meeting the 50 day average, from beneath. The majority of their RSI(2) readings are near levels associated with reversals.
On Friday, theÂ volume and ATR multiples were large, which is bullish. However, these stocks are just coming off a bounce from the lower channel lines. Technically, they are very much still in a downtrend. Gold stocks need to continue rallying above the 50 day moving average, and above the upper channel lines.
On the chart above of [[GLD]] , should the ETF be able to rally above its 50 day average, I’ll be looking for strong resistance near $87.50, which is the top of the declining channel and also the falling 200 day average.
Barrick Gold Corporation (USA) [[ABX]] is a top-ranked miner. Everything about this chart is similar to GLD. To break the downtrend, ABX needs to rally above the 50 day line and the upper channel boundary. Beyond those crossroads, I will look for resistance near the falling 200 day average.
[[GOLD]] is also similar to GLD and ABX. Progress Friday was also halted at the 50 day average. GOLD has lots of immediate resistance to clear before reaching for the 200 day simple moving average.
Gold and related stocksÂ are showing promise of breaking out ofÂ their downtrends. The major moving averages as well as overhead resistance, whetherÂ in the form of declining upper channel boundaries or falling upper resistance lines, should be watched closely. Failure at these areas may mean that gold resumes the downtrend.
The targets I’ve provided would be appropriate for short-term and swing traders. If you are buying gold for a long-term hold, I would watch and see how gold behaves at these resistance levels. It may be possible to pick it up cheaper than Friday’s close.