Back in June I posted about the upcoming rally I was expecting in the gold market based on a combination of things such as commercial activity, seasonals and technicals. You can read that post by clicking here. Since then we've had a significant rally and I thought now would be a good time for an update.
Above is a weekly chart of GLD (Gold) and as you can see we've had a nice rally over the past 5 weeks. You'll notice that GLD is now forming a doji at key resistance. This is usually a sign that the market is growing a little tired and we can expect 1 of 3 things to follow:
1- The market reverses to a downtrend
2- The market ignores the doji and continues higher
3- The market consolidates for awhile
Rather than guess what will happen I'll let the market tell me what it wants to do by placing a protective stop right below the low of the doji bar. If that low is taken out I would suggest taking profits on at least half of your long position. If the market continues to rally next week without taking out the low of the doji bar, then simply hold on and let the market go where it wants to go. As always, lets see what happens.