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The popular gold-based exchange traded product, “GLD”, is testing the Down trendline from its 2011 peak.

I think most participants would likely characterize recent markets as exciting — or, at least, interesting. That’s because, despite historically depressed volatility indices, there has certainly not been a lack of movement. Stocks are soaring, bond yields are jumping, the U.S. Dollar is plunging and oil prices are climbing. And that is to say nothing of the new crypto-currency asset class which, depending on what time you look, is either melting up…or crashing.

One of the few assets not partaking in this wild ride is precious metals — somewhat ironic given the level of passion and excitement that the asset class usually incites. In reality, the price of gold, as measured by the popular exchange traded product, the SPDR Gold Trust (ticker, GLD), began the year smack dab in the middle of basically a 2-year trading range. And the GLD hasn’t moved more than about 10% above or below that mid-point during that time. You can say essentially the same thing for the price of silver, as determined by the iShares Silver ETN (ticker, SLV).

Gold bugs might just get their opportunity to finally move the needle here soon, however. At least, they have a potential catalyst close at hand, based on the chart of the GLD. How so? The fund is presently testing the Down trendline stemming from its 2011 all-time high. Should the GLD be successful in breaking out above that trendline (presently near ~127), it may open the way for further, perhaps considerable, gains in the near-term.

It is a similar chart story with the SLV as it too is testing its own post-2011 Down trendline near 16.25 after bouncing off of its post-2008 Up trendline in December.

So, after drifting through multi-year doldrums following a potential longer-term bottom in early 2016, precious metals finally have a chance to join in the excitement of the rest of the world markets. If GLD and SLV are able, again, to overcome their respective long-term Down trendlines, they could be off to the races in putting in that long-awaited next up-leg following their 2016 rallies.

Of course, the developing potential breakdown in the U.S. Dollar Index may well serve as a tailwind for precious metals in their attempted flight higher. If the DXY cannot hold or reclaim its recent lows, it runs the risk of potentially meaningful further losses. If so, there’s no guarantee, but such a development would presumably aid in the precious metals’ breakout attempt.

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Gold fund GLD is (again) challenging its post-2011 Down trendline.

It’s no secret that gold has had a tough decade. Yes, the metal put in a potential key bottom at the end of 2015. The prior four years, however, saw the metal nearly cut in half. Even after a 2-month approximately 20% pop in the price of gold the following the 2015 low, the metal has gone nowhere. Indeed, 16 months later gold is exactly where it was in February 2016.

From a technical perspective, the main culprit in holding prices back over the last half dozen years has been a Down trendline stemming from the 2011 highs. On a longer-term chart, particularly one that has seen such a large move in prices, we would typically prefer a log scale chart for analysis. However, a linear chart has been extremely useful in identifying key points of resistance over the last six years. For example, the trendline put an end to rallies in October 2012, July-September 2016 and in mid-April of this year.

Gold bugs have another opportunity at their hands, though, as gold is once again testing its 6-year Down trendline. Using the SPDR Gold Trust ETN, ticker, GLD, the trendline is currently just above the 121 level.

Now, breaking this trend line does not guarantee that gold is off to the races again. However, removing this 6-year old source of resistance would not be insignificant in opening up an easier path to the upside. In the GLD, we would look for immediate-term upside to the 125 level, and then to the summer 2016 highs near 130.

Of course, we don’t like to anticipate breakouts. Thus, we must assume that the trendline will hold again. If it does, the GLD it looks destined to remain, for now, in the range it’s been in for literally four years now. In that scenario, it still looks to have potential downside to the 110-112 level

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This symmetrical triangle that’s been forming over the past year is resolving itself to the downside as prices break the lower of the two converging trendlines. We should not be surprised as these types of consolidations tend to resolve themselves in the direction of the underlying trend, which in this case has been down since the 2011 highs. With momentum in a bearish range and rolling over hard, I would expect Gold prices to at the very least retest the 2013 lows near 1180. But in all likelihood we will break those levels and head towards 1000 where we run into support from former resistance in 2008-2009. From a sentiment perspective, there is no where near as much pessimism in this market as there was at last July and December’s lows. This lack of extreme bearish sentiment is likely to be the catalyst to take this market much lower. It would take a rally back above 1290 to invalidate this bearish breakdown 

Short-term you can see prices breaking below the lower of the two converging trendlines that define the symmetrical triangle consolidation in Gold. The fact that prices failed to reach the upper trendline in July was warning number 1 that this market was weakening. Now that we’ve officially broken down, we are running into support from the early June lows. I would expect some sort of acknowledgement of this support, but only temporarily. Any rallies can be sold as I think we break this support level very soon and head towards last year’s lows near 1180. It would take a rally above 1290 to invalidate this bearish thesis. Although I believe that is the lower probability outcome, keeping an open mind is something that we take very seriously. If you’re still not in, I think a great short entry would be a bounce above 1270