Wall of Resistance Comes Down (Finally) for GLD

Finally, the 114 wall in the SPDR Gold Shares (GLD) comes down!  Now it begins to get interesting.  

Let’s skip to the good part first – the highest Bayesian Probability (BP) path is a target of 120 and then 123 now.  The "best" set up for bulls would actually be a pullback into a confirmed vibration window for three trading days spanning 10/12, 10/15, and 10/16 – of which I’d say the 10/15-10/16 dates carry the most weight.  

So basically, in a golden world, the LOD over the next three-day timespan should not be broken as we head into later next week.  

Let’s talk BP supports:  GLD 114.75 and 113.50.  IF GLD powers directly to 116.50-ish, then it does begin to open up a conditional, pre-posterior risk of a "false break" out of the last 2-month basing pattern and then a strong turn down (this would also most likely coincide with the vibration window discussed).  

For now, I will carry forward the following thoughts for perspective  (as of 10/10).  Here are a few BP paths for GLD:

(1) GLD presses sustainably above 114 and then thru 115.50; and then it could be difficult for bears to slow it down until at least 120 [BP = 30%],

(2) GLD remains mired within this wide trading band between 111-114 for several more weeks [BP= 44%], and

(3) GLD extends below 111 [BP = 28%].  

Further, on a micro level I would add that holding GLD 111s and then rallying back above 113.25 would be conditionally a very strong signal in favor of the bulls and the 114s wall would most likely come down and put path 1 squarely in focus.  

Further, I would add that there is a strong conditionally linked path between paths 1 and 2.  What does that mean?  Basically, path 2 has a layered conditional path to path 1, which implies that path 2 favors a break to path 1 versus path 3 once completed.  This layered conditional path out of path 2 would have path 1 at 65% and path 3 at 35%.”  Basically, it's good to see the BP odds work out on 10/11.

Luke Miller, who has developed a Bayesian timing system for trading the stock market, hosts two Bayesian timing premium services at ElliottWaveTrader.