It has been a volatile week in global markets and an update on gold is overdue. I last wrote about gold and its corresponding ETF, GLD, on May 4th. For several months I monitored the long-term channel in gold, which was broken in April. GLD did not break drastically below the channel, and depending on how precise the trend line was drawn you could argue it did not break below the channel until last week:
You will notice in the chart above the words “neck” and “head” drawn. GLD had been setting up for a potential inverse head and shoulders pattern, but last week’s sell-off violated this potential pattern. The next price target is the low from December 2011 which we came close to touching this week. After the $148 level, $140 appears to be a potential level of significant support. The $140 level also corresponds with the 38.2% retracement level.
All of this does not imply that gold is doomed – these are simply key patterns and price levels to monitor. Gold could just as quickly reverse course, but a longer-term reversal would need to be confirmed by price action. A break-out above $174 and then obviously the all-time high around $186 would confirm an uptrend.
To see some fibonacci analysis on Apple (AAPL) from April 18th, see my chart on Chart.ly here. AAPL is fast approaching the $510 price level, which corresponds with the 23.6% retracement level:
Note on the chart above that the fibonacci price levels for AAPL all correspond with key levels of support and resistance. The points at which fibonacci and prior support/resistance align are important levels to watch as they may serve as potential levels of support/resistance in the future..
I never offer predictions on this site, although I do my best to offer analysis. Technical analysis and charting is not for those who want to cling to an idea (or price target), because markets evolve, patterns fail, trends reverse, etc. Risk management is the most critical component of any investing plan. With all of that said (can you tell I am leery of being bombarded by emails from AAPL supporters?), if $510 support does not hold on AAPL, the next level of significant support is $425-$430. AAPL is still in a long-term uptrend but it is fast approaching some key price levels.
The other interesting feature on AAPL’s daily chart are the two gaps in January and February. The trading cliche is that gaps tend to fill (I have seen no statistical evidence to verify or refute this claim). The lower of the two gaps is just above the $427 price level, which again aligns with both the fibonacci retracement level and prior resistance (current support):
For those interested or new to charting, I highly recommend Peter Brandt’s blog – he wrote a nice piece yesterday, Chart Trading for Dummies.
