Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Big Volatility Move in Gold is Impending

|Includes: GDX, SPDR Gold Trust ETF (GLD), IAU

Gold has been trading in a narrowing sideways range since late-October.  Using the (NYSEARCA:GLD) ETF, you can see below that the range is slightly uptrending due to higher lows, making it somewhat of an "ascending triangle" formation.  This type of pattern of decreasing volatility (also can be seen in the Band Width Indicator at the bottom of the below chart), will eventually lead to a big breakout.

The direction of the breakout?  Signs point to an bullish upside move, but it's not certain.  Signs of strength are that Daily Percent R has mostly stayed above the 50 mid-level and GLD is trading above its uptrending 20 and 40 day Exponential Moving Averages (purple and red trendlines at top).  But, MACD and DMI aren't very strong here, in my view.

GLD Daily Chart


Targets for GLD should the breakout occur soon?  Upside, 145 looks a likely target, downside, 120 should be strong support. Advanced option traders who want to bank on a volatility expansion could consider buying GLD option volatility here with it priced around 18%.

By Moby Waller,
BigTrends.com

Disclosure:  No current position in GLD or its options.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.