Gold – A Technical Upside Target Price

By | February 20, 2020

In June last year, the SPDR Gold Shares ETF (GLD) broke above long term resistance situated in the $130 level. This level was also rim line resistance of a shorter term cup and handle pattern on the weekly chart.

The cup and handle pattern projected an upside target price measured by taking the depth of the cup portion of the pattern and adding it to the rim line. This calculation identified the $145 level as the price objective.

The GLD tested the $145 level in August and September last year. After failing to take out that level the ETF pulled back in a declining channel pattern. The combination of the upside price action in the last half of 2019 and the subsequent channel consolidation formed a bullish flag pattern.

The flag pattern also projects a pattern price objective. The process is to simply take the height of the flagpole and add it to the top of the flag. In this case, it targets the $170 area.

In December 2019 the GLD broke out of the flag consolidation channel. Price continued to move higher in the early weeks of this year then began consolidating again in the $147/$148 area. In today’s session the GLD is up over 2%, following up on its gain on Wednesday. It is well over the $147 now and may be on its way to fulfilling its $170 price objective.

Technical patterns don’t always play out as we all know, and by my anecdotal take is that projecting price objectives has even less success. But the purpose of both exercises is to provide context for a trade.

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