Let's notice that the streetTRACKS Gold Shares (GLD) peaked on Tuesday at 97.50 at the top of its June-July price channel, and in the past 48 hours or so has traversed the channel to test its lower support line just above 93.50, which so far has contained the decline. So why not re-enter a new long position? Because the pattern carved out within the decline from 97.50 to 93.73 exhibits bearish form, which warns me that there is more weakness ahead in the GLD, even if there is an intervening rally to, say, 96.00/50 first. In other words, I want to wait to see if the GLD tests -- and breaks -- the lower channel support line, which will argue for additional weakness into the 91.00-90.00 target zone.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.