The Gold and Oil Guy: Weekly Gold, Silver, Oil & Natural Gas Analysis

Last week was nothing special as stock market continued to drift higher on light volume and the Volatility Index (VIX) reaching a new multi year low. This mix of higher prices on light volume, multi year lows in the VIX and an overbought market paints a clear picture to a market technician – Be Ready for a Pullback!
Last Wednesday I sent out a report covering sector rotation comparing the price performance of these sectors from the January peak with last weeks price action. It was very interesting and it pointed to a sharp
sell off Thursday or Friday Here is last Wednesday’s report if you are interested:
http://www.thegoldandoilguy.com/articles/28-day-sector-rotation-commodity-index-update/

GLD Gold ETF Daily & 60 Minute Chart


Last week gold gap higher then traded sideways for a few days. I will admit it was very tempting to buy into the move but I stuck with my trading strategy which is to not chase moves which gap in my direction.
Gaps are known to get filled about 70% of the time. What that means in this situation is that the price will most likely sell back down to fill that gap before trying to move higher.
All that said the problem I see now on the daily chart is the possibility of the mini Head & Shoulders pattern breaking down. If gold moves any lower then I would expect a sharp pullback. The measured move would equal a pullback to the $104 area on the GLD chart and the $1070 level for spot gold.

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