Will Gold Make A Double Top?

After a big drop gold is finally showing some strength. Last Friday we saw a very nice big volume follow through day. After Thursday's test GLD spiked higher, which is also a very positive sign. It looks like gold is ready to attack the all time highs in the following week or two.

Weekly chart is not that appealing. There is a very obvious three week wedging rally which is never a good sign, especially after such high volume drop. Also, gold is now coming into the timing band for a considerable pullback at least down to the trendline that has been valid for almost two years now.

In brief, this smells like a double top formation. Any long term buying into this rally is a very risky business in my opinion. Actually, I expect that gold will form a 2B reversal. If you don't know what 2B reversal is, just google it. If that happens, it should be a high probability short.

Precious metals sector is high dependent upon behavior of the dollar. So let's see what the dollar ETF UUP is doing on the weekly chart.

It was expected that dollar will rebound after a heavy accumulation week. However, such rebounds almost always get tested. It wouldn't surprise me if the dollar would actually make a new low. This would correspond with gold making new highs. Last week's bearish engulfing candle is telling. Now we should wait and see.