E Gold Technical Perspective - Why So Bullish?

Does technical analysis need to be so convoluted?  Here are a couple of definitions from different sources:

1Convoluted: (especially of an argument, story, or sentence) extremely complex and difficult to follow. 

2) Convoluted sentences, explanations, arguments, etc. are unreasonably long and difficult to understand.

We are not talking about the accuracy or relevancy, or even the general length of an article centered around charts and graphs. But the convolution of most technical analysis does provoke some head-scratching.

Another concern might be the nearly universal use of extrapolation. 

1) Extrapolation: the action of estimating or concluding something by assuming that existing trends will continue or a current method will remain applicable.

2) Extrapolate: to infer or estimate by extending or projecting known information. 

Judicious use of extrapolation is warranted. However, the inference of trend continuation can lead to predictions and expectations of little foundation or merit.

In this article, we will look at three charts (one-year, five-year, and ten-year) of GLD, the SPDR Gold Shares ETF. (source for all charts)

In order to emphasize simplicity and consistency, I have drawn only two lines on each chart - a rising uptrend line of support; and a descending overhead line of resistance. All three charts are updated as of Friday, February 15th, 2019.

Immediately below is the first chart, a one-year history of daily GLD prices...

From this chart, we can see that GLD has worked its way higher since its recent low last August. And it appears that it soon may intersect/test overhead resistance at 126. If it does break through and move higher, most observers would probably think that doing so would signal much higher prices.

That seems reasonable, but how high? And what about the downside risk? If it doesn't break through soon, it could fall back to its rising uptrend line of support. Currently, that is a drop of about eight percent to 114.

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Kelsey Williams is the author of two books: 

INFLATION, WHAT IT IS, WHAT IT ISN'T, AND WHO'S RESPONSIBLE FOR IT

 and 

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