May 10, 2011
Shares of Streettracks Gold (NYSE: GLD) moved higher on Monday, May 9, after last week’s 7% selloff. Is a new rally ahead?
Typically corrections chart out a three wave pattern. If GLD is going to follow the same path it still has another wave down to lower lows.
That said; gold is an emotional trade and if traders suspect the worst is over, GLD could just continue higher.
One way to take advantage of a potential rally is to purchase GLD at current levels, around $ 147.50 a share, and place a sell stop just beneath the prior correction lows at $142.50.
If those lows are taken out the third wave down is probably in progress. But if we do have higher highs ahead, the $142.50 stop is a limited risk trade.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy does not hold a position in Streettracks Gold.