Two weeks ago, I reported that the rally in gold was reaching what was perhaps an overzealous level.

Citing the net long position that large speculators had built up as one reason the gold rally was perhaps getting overdone.

During the last two weeks, the large speculators have added to their net long position and it has now reached more than 290,000 contracts. This is the biggest net long position in the last five years.

As I was looking at this information, I was also looking at the weekly chart for gold. In the last 11 weeks, gold has finished higher nine times.

This has led to large speculators adding to their long position, but it has also put gold at an overbought level that only happens once in a while.

The 10-week relative strength index, or RSI, for gold hit 84 last week and it has only been this high three other times in the past five years: November 2009, November 2007 and May 2006.

Each time the weekly RSI has been close to or above the 85 level, a correction has occurred shortly thereafter.

One tip-off on the corrections has been when the weekly stochastic readings make a bearish cross and the indicator lines did just that last week.

If you are holding bullish positions on gold, you might want to lighten up during the next few months.