Gold Futures Show Pocket Pivot

Published : August 13 2010 at 16:12 ET

Going into the close today we note that the nearest gold futures contract, symbol GC #F on eSignal, flashed a pocket pivot buy point yesterday with volume that was higher than any down-volume day in the prior 10 trading days, which meets the definition of a pocket pivot volume signature as gold comes up through its 50-day moving average. This moves comes after a short consolidation right under the 50-day simple moving average, as shown on the chart below. We note that there is no corresponding pocket pivot on the Gold Trust (GLD) ETF. However, the mid-range close on the GLD three days ago before it gapped up above its own 50-day simple moving average looks constructive.

Below is the chart of the GLD, and you can see the mid-range close on Wednesday of this past week where the stock found support at the 10-day (pink) and 20-day (green) moving averages before gapping above the 50-day moving average:

Does this create a playable buy point for the GLD? We tend to think so, using the 50-day moving average as your guide for a stop. At the very least, this bears watching as the Fed administers QE2.

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