Gold bulls have not had an easy time of it lately. The precious metal has lost ground in seven of the past nine weeks. And in Sunday evening trading, gold futures briefly hit an eight-month low.
The move comes on the back of a surge in the value of the dollar. The US Dollar Index, which compares the greenback to a basket of major currencies, rallied to a 52-week high over the past month. And as each dollar becomes worth more, it takes fewer dollars to buy the same amount of gold, leading gold prices to drop.
But according to Carter Worth, chief market technician at Sterne Agee, the dollar is about the turn around—potentially leading the gold price to stage a serious rebound.
When it comes to the recent slide in gold prices, "we think the opportunity here is to take the other side of it," Worth said on CNBC's "Options Action" on Friday, when gold also hit an eight-month low. "We think the massive rally in the dollar is overdone, and you actually can catch a pop in gold."
To make his point, Worth starts with a chart of the U.S. Dollar Index.
After the recent rally, "we're simply at the top of a range," he said.
That tells him that the move is likely coming to a close.
"You never, in principle, exceed a range when you first get there. In order to break out from a range, you have to coil, more often than not. So our premise here is that having reached the top of the range, actually the dollar is pricing in quite a bit of what is coming, and that we will start to back and fill."
Worth says a similar pattern can be seen on a longer-term chart of the Dollar Index.
"Basically, the rally in the dollar leaves you at a very difficult level," he said. "The presumption is that the rally will stop here, for now, on an intermediate basis."
Given that he thinks the dollar will turn lower, Worth is "looking for the GLD [the SPDR gold ETF] to move up about 8, 9 percent here."
To capitalize on such a move, Michael Khouw of Dash Financial recommends buying the December 121/127 call spread for about $1.55—an options trade that will make money if the ETF is 3.3 percent higher by December.
"The idea here is that even if you think it's a 50-50 bet that gold could go either up or down from here, you have a pretty good risk-reward relationship on the upside," Khouw said.
Still, it's worth noting that the options trader is no great fan of bullion.
"Actually, in the longer term, I could see it going to $1,000," Khouw said.