After gold’s incredible surge last week, it is now facing a critical test that will either prove or negate a new bull market in the yellow metal.
The gold ETF GLD crashed through the 30-week moving average two weeks ago on 2-times average weekly volume, then followed up that move with a surge last week on 4-times average weekly volume. This explosive increase in buying pressure accompanied with a move above the 30-week moving average is the first ingredient to a new Stage 2 bull market.
The second and more important test for the transition from a bear market to bull market is a retest of the 30-week moving average that holds as support. This confirms that prices are now trending higher and that the rally was not merely another bear market rally that failed at resistance. The chart below marks this second ideal buy point B and notice that it occurs above the 30-week moving average.