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Trade of the Day: The Bull Train In the GLD ETF Is Just Getting Started

The GLD etf is slipping into a major bull costume

The price of gold, as measured by the popular SPDR Gold ETF (NYSEARCA:GLD), is higher by around 10% year-to-date. While this is a welcomed move for fans of gold, it has also been a long time coming. Many traders and investors alike, however, have yet to get on this new bullish trend in the precious metal. And I think the GLD ETF can still climb plenty higher.

Trade of the Day: The Bull Train In the GLD ETF Is Just Getting Started
Source: Shutterstock

When I last voiced my take on the GLD ETF on June 19 I offered the following bullish take: “investors and traders with a time horizon of a few months/quarters could look to buy the GLD ETF here in the mid-to-high $120’s with a next upside profit target at $140 and a stop loss at $120.” Since then, GLD has rallied about 5% and is currently testing its late June highs.

Before looking at the charts, let me point out that in my experience gold or the GLD ETF is no easy asset to time from a trading perspective. Case in point? The past six years or so where GLD has traded in a choppy fashion in multiple time horizons. The good news, however, when gold begins a new major trend (which I think it may have already begun earlier this year), this asset can really move.

GLD ETF Charts

Click to Enlarge
Source: Charts by TradingView

For some perspective, let us review the multi-year chart with weekly increments. Here we see that GLD, over the past six years, has traced out a clearly visible bullish rounding bottom pattern (blue annotations). We also see that over this time span, the GLD ETF had numerous failed attempts to break above the upper end of said pattern, around the $130 mark.

However, in mid June, this former technical resistance level has finally been overcome and the more GLD can base above the $130 area, thus turning resistance into support, the better for a continued move higher.

Click to Enlarge
Source: Charts by TradingView

On the daily chart, we see the June 2019 breakout above $130 more clearly. We also see that over the past few weeks, the GLD ETF has largely been basing, i.e., consolidating the rally that began in May. All of this is constructive for further bullish price action and according to my sources, more momentum investors and trend followers are now waking up to this bullish trend.

On Wednesday, July 17, the GLD ETF made another bullish push and has marginally broken out of this multi-week consolidation pattern. While I might think gold is a notoriously challenging asset to time in the very near term, this move is constructive for the bulls.

I still think GLD can be bought here around the low- to mid-$130’s, with the next upside target around $140. Ultimately, looking toward the coming months and quarters, I think the GLD ETF can reach $150, albeit not in a straight line. Any strong bearish reversal, particularly one that holds on a monthly closing basis would be a stop loss on bullish trading positions.

Remember, one can always get back in.

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