Momentum Of GOLD.

The True Strength Index is a low lag-time momentum indicator that can be used at www.FreeStockCharts.com. Generally, it's bullish when the indicator is above zero and bearish when it's below zero. As the indicator is very sensitive and responsive to movements of price, it can be effectively interpreted for buy and sell decisions.

SPDR Gold Shares (GLD) is making new all-time highs last night. So let’s see what the momentum indicator is telling us. Above is a chart of the hourly price action of GLD.

A couple of things are obvious. First, the price performance of GLD has been steadily accelerating for the past six trading sessions. This is significant because it means that as the acceleration begins to slow, price could still continue higher -- but climbing at a slower rate. As the current reading is .45, which is relatively high, I think it's likely that gold will continue to rise while the TSI momentum indicator will begin to diverge (trend lower).

There are a couple of techniques for making a sell decision with this setup. One could simply wait for the TSI indicator to finally cross below zero -- which will be some time from now, or sell when the indicator makes it first divergence (a lower high if price is still going higher). A third technique, and one that you should be forewarned of whipsaw, is to buy/sell when the indicator crosses the moving average (purple line).

For the past four months, Market Vectors Gold Miners ETF (GDX) has been advancing in a pattern of three momentum waves followed by a correction. While there's no guarantee that this particular pattern will continue, it's encouraging to note that we've recently been through both a correction and a consolidation phase and are just beginning a new first wave.

It would surprise me if GDX doesn't ultimately take out the previous all-time high of $54.63. Presently, we observe open gaps in daily trade that may be revisited on a future date. But for now, this looks like a powerful first wave that should logically be followed by others.