Thursday’s precise stall at the 118.43 midpoint resistance shown has validated the bullish pattern and its 122.36 target. The easiest way to get long would be to place a mechanical bid on the green line at 116.44, stop 114.49. If GLD pushes above the red line without first pulling back to the green, we could attempt a mechanical buy at 118.41, stop 117.09. This would be somewhat less risky than doing so at the green line. To meet our criteria for this type of trade, GLD would first need to exceed the red line by 0.60 (or so), and then it would have to hover above it for at least three bars. I’ve sketched this hypothetically for your further guidance. I wouldn’t recommend substituting options for stock, since we typically buy puts or calls only at swing highs or lows that can be predicted fairly precisely. (Note: The green price bars show off-hours trading. They are necessary here because one of the three coordinates, the point C low, occurred in the evening.) ______ UPDATE (February 22, 11:35 p.m. EST): Back away for now. GLD gapped down through the green line on the opening, negating our strategy. If you bought the clumsily rigged opening anyway, you bought on the low of the day but you should still scratch the trade.
