Gold prices got a bid on Tuesday as the dollar rally softened and geopolitical unrest had investors scrambling for safety. But according to one top technician, the boost is nothing more than a dead cat bounce.
"I think there's significant downside from current levels in gold and its benchmark ETF, the GLD, " Rich Ross said Tuesday on CNBC's "Trading Nation. " Gold has come under fire in recent years as the U.S. dollar index has rallied significantly. Gold is down more than 9 percent alone in 2015, and tracking for its longest back-to-back yearly losing streak since 1998.
Looking at a long-term chart of the GLD, Ross noted that just before its massive decline, the ETF put in a double-top formation. Technicians often view these patterns as confirmation of reversal in trend. "This bearish multiyear double top and lower high ultimately marked the peak in gold prices," Evercore ISI's head of technical analysis said. "Clearly we are down significantly from there."
Furthermore, Ross added that the chart has been in a downward facing channel and trading below its 100-week moving average for the last two years. "I expect gold prices to continue to move lower within this channel and probably accelerate to the downside coming out of that channel."
Ross identified the $100 level in the GLD, which correlates with $1,000 an ounce in the underlying commodity of the first psychological level that could be breached. Once that support is broken, Ross expects the GLD to fall as low as $85, a more than 17 percent move from its current price of around $103.
"I would use any boost on the back of geopolitical unrest to be a seller of the GLD for a move down to $100 and then ultimately to the high $80s," added Ross.
Want to be a part of the Trading Nation? If you'd like to call in to our live Wednesday show, email your name, number and a question to TradingNation@cnbc.com.