These are the kinds of things that frustrate me but are just a part of trading and investing.

I last looked at gold on June 1, 2011, and I wrote that I was bullish even though the metal was approaching all time highs. Buying at the highs is not my thing. I was basing this analysis in part and on the fact that my bond model was positive for higher bond prices (i.e., lower yields). The bond model still remains positive although the technical action last week in Treasury bonds may be a warning sign.

Anyway, fast forward to the set up described below for the SPDR Gold Trust (symbol: GLD). See figure 1, a daily chart. The black dots on the price chart are key pivot points. Key pivot points are the best areas of support (i.e., buying) and resistance (i.e., selling). GLD has been weak (despite the above mentioned positive fundamentals), and on Friday, GLD gapped and closed below the first level of support at 145.15. Support now becomes resistance, and this is usually a sign of further weakness. More importantly, this kind of price action also gives us a sign post for navigating future price action in GLD.

Figure 1. GLD/ daily

Sometimes and especially in bull markets, breaks below support are only meant to wash out the weak hands. A close back above new resistance/ old support would accomplishment just that. Therefore, a close back above 145.15 would be bullish.

Now comes the frustrating part and one I have little control over. GLD gapped well above our 145.15 resistance level this morning. A close above this level is bullish. However, it would be nice (and we know the market is rarely that) that the entry would be as close to the new support level as possible. For GLD, I can see the technical set up developing, but I have little control over the outcome. Nonetheless, the price action remains bullish especially in conjunction with the fundamental set up.