GLD - Head in the Clouds?

Does GLD have its head in the clouds? Well, not exactly. But, as you can see from the chart above, the price of GLD has been nearing the Ichimoku Cloud.

The Ichimoku Cloud is a pretty interesting, multipurpose indicator. If you want the full explanation please click here.

The short version is that when the price is below the shaded areas, or cloud, price is in a general downtrend. When price is above the cloud, it's in an uptrend.

The chart makes that pretty clear. You can see the big run higher in GLD and the subsequent decline in prices.

Since 2011, GLD has spent most of the time either below the cloud. The few times price has entered the cloud marked times of more neutral, sideways price action.

With the price of physical gold pressing higher, we could see price make an attempt to rise either to or above the cloud. You can't see it because it is obscured by the price bars, but if the blue line crosses above the red line then it could indicate further upward price momentum for the GLD.

It is also considered bullish for prices when the price crosses above the red base line. Price has spent at least part of the last two weeks above the base line.

As an aside, the above chart of the GLD cloud is almost identical to the chart of the Comex Continuous Gold Contract, so it is a pretty good stand in for the gold price.

Bottom Line: The GLD price has picked up some strength the past two weeks. The test will come when it bumps up against the cloud. Until price can move above the cloud strongly it's best to assume that the overall trend is still down.