Currently, the gold shares are in both a wonderfully opportunistic and yet terribly dangerous position, dangling at the edge of a precipice.

First, we'll examine the bullish interpretation.

It's rather obvious that the XAU 150 area is providing some resistance. However, the $XAU:$GOLD ratio has given its buy signal and we await confirmation from the MACD. In the past, an upward leg has begun with the simultaneous expression of these two signals and they have occurred within around two weeks of one another. This is a very exciting development.

Now for the bearish interpretation of current technical events.

Markets tend to move in symmetrical and fractal fashion and the gold market is no different. Above is a chart of arguably the best gold stock fund around. The present time period reminds us of the Spring of 2004 when the gold stocks retreated quite a distance. We have outlined in blue boxes the similarities. Note that the macd never crossed up and over before the stocks fell and that it hasn't crossed at this time either.

Our current opinion is that the gold shares have, at best, a couple weeks in order to perform and the MACD cross up and over or they risk a significant pullback.

Thirdeyeopentrades wishes you Health, Wealth, Wisdom and Happiness!

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