As we discussed on Wednesday, GLD’s critical resistance level is 120. As long as GLD remains below 120, it’s better for medium- to long-term investors to hold off on any massive gold buys. And sure enough, on Wednesday GLD hit a high of 120.02 before retreating Thursday.
Per “best trading practices” we’ll forego discussing the why’s and get right to the “what can we do to make money from this.” Your friendly Gold Enthusiast sometimes slips into the abyss of why’s and who’s, but let’s face it, that doesn’t put any money in your pocket. GLD 120 is important right now because that’s where big mistakes can be made. If you quickly buy when GLD hits 120.00, pronounced “one twenty point zero zero” for effect, you’d be in a losing trade right now. You need some assurance that GLD will keep rising.
That’s what other indicators are for. If you’ve explored any charting tools you’ve doubtless seen the almost endless lists of indicators people have put together to try to tell if a move will keep going. Here are two pieces of free advice – well, three as it turns out…
One: RSI is a pretty good thing to watch. RSI tries to show the balance of orders executing at the bid vs orders executing at the ask. In essence, what’s the balance between people buying and people selling? When there’s more folks interested in buying, that means demand is strong, and price should rise. ECON 101, remember?