Let's notice that the streetTRACKS Gold Shares (NYSE: GLD) peaked on Tuesday at 97.50 at the top of its June-July price channel, and in the past 48 hours or so has traversed the channel to test its lower support line just above 93.50, which so far has contained the decline.

So why not re-enter a new long position? Because the pattern carved out within the decline from 97.50 to 93.73 exhibits bearish form, which warns me that there is more weakness ahead in the GLD, even if there is an intervening rally to, say, 96.00/50 first. In other words, I want to wait to see if the GLD tests -- and breaks -- the lower channel support line, which will argue for additional weakness into the 91.00-90.00 target zone.

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of Exchange Traded Funds (ETFs) that track equity indices, metals, energy commodities, currencies, Treasuries, and other markets. It is for traders with a 3-30 day time horizon, who use the service for guidance on both specific trades as well as general market direction

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