Gold bulls have been patient or discouraged for a long, long time, but right now the charts suggest we could see a good trading move to the upside for the precious metal. Let's check.
In this Japanese candlestick chart of the ETF SPDR Gold Shares (GLD) , below, we can see a number of subtle positives. Prices are closing right on the declining 50-day moving average line. The slope of the 200-day line turned positive in early April.
The daily On-Balance-Volume (OBV) line has held steady in April and May and is quietly turning up.
In the lower panel is the 12-day price momentum study, which shows higher lows from March despite prices making lower lows -- this is a bullish divergence and could be foreshadowing a rally ahead. If you drew a downtrend line along the highs from February we are very close to breaking that line.
These are all technical signals that look bullish to me at a time when the U.S. dollar has been firm. Interesting.
Bottom-line strategy: It seems like a rally in gold is a mirage but this time I think the bulls will get the upper hand for a decent trade from the long side.