Those who hope tell themselves - one day the tide will turn. I think a lot of people are either long or they’re not and were waiting for the rise of the top metals. Below are fresh charts which could help us to understand where we are and when the tide will turn higher.
Chart 1. Gold Daily: Watch The Breakup For Reversal
Chart courtesy of tradingview.com
I’ve written quite a lot in my previous posts about the tricky nature of corrective structures which have unpredictable outcomes. But the more time we spend inside of it, the higher are the chances that the situation becomes clearer.
Gold is in a consolidation from July, and it’s lasted for almost 5 months already. We had a boring time within the $1305-1367 range till the start of October when the sudden drop to the $1241 level broke the simple structure of correction. Another leg up to the former downside of the range at the $1305 level was deemed to be a long-awaited reversal, but gold failed there and fell back quickly to lower levels. Then the sharp move of the price changed to rapid short zigzags within the small narrow blue downtrend. Such a chart formation appears at the end of the move and therefore we should watch closely if the price would break up the upside of that blue downtrend above the $1187. It would give the first upside signal of a reversal in the market.
Are there the necessary prerequisites, which could add to the specific chart formation (blue channel) for reversal? I think we have several. Let’s start from RSI; it is oversold, and we have a higher low on it compared to the lower low on the price chart, which means divergence. It should play upside sooner than later to comply with the indicator. The next is the depth of consolidation – it reached the deep enough 61.8% Fibonacci level at the $1172 mark. And the last one is the composition of the structure. As I showed in the Chart 2, of an earlier post the CD (ii) segment could hit between the $1167 and $1148 marks (1.272-1.414 times of AB segment). So the price hit right inside of that range at the $1160 level.
The next significant resistance is located at the $1305 level – the former downside of the previous range. The price tested it both from the upside and from the downside, and it proved to be quite strong. The price should break and close above it to confirm the reversal. The minor barrier could appear at the $1240-1250 levels where the June and October lows were recorded. Below $1140 there will be an invalidation of this setup.
Chart 2. Silver Daily: Buyers Are Already In
Chart courtesy of tradingview.com
Silver is one of the champions of this year, and it is also beating gold within the ratio. Besides that, it has a very neat chart structure as the notorious consolidation is still contained within the red expanding downtrend. To compare, you can look at the Chart 1 above where gold has abrupt structure, which broke below the downtrend last month.
In the silver chart, we can see which factors helped the metal to be the first to start the reversal. The RSI is at a higher level compared to gold (42 vs. 28) and it almost reached the important 50 level playing out the accumulated divergence with the price. The consolidation reached the important 61.8% Fibonacci retracement level. And the price almost touched the downside of the red expanding downtrend.
The breakup appeared on the 28th of November. Then we can see a pullback to the broken trendline and now the price is moving north to break above the previous high at $16.86 set at the breakup. The next important resistance is seen only at the $19.25 mark where the downside of the first leg of correction is located. We also have the upside of the red expanding downtrend here. Below $15.5 there will be an invalidation of this setup.
Intelligent trades!
Aibek Burabayev
INO.com Contributor, Metals
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
They have managed to reduce everything now, including the dollar into trading like a penny stock, up and down 100 basis points in seconds, absolutely ludicrous. They have destroyed capitalism, (capitalism cannot exist without fundamentally true price discovery) there are no markets, only constant computer controlled interventions!
Again Aibek.... I appreciate your insights. For the fellow trader we all know that there are different variations to trade a market, markets or industry. I prefer trading Silver stocks on the NYSE, short term.
This info is a confirmation of what I see at this time. CDE and I have had a decade of following each other.
Mining stock tend to lead silver which I follow as SLV but keep Going into INO to see what the Commodity
World is doing!
What has the readers seen since the opening on the US exchange and how and what, this author shared with us yesterday six now shaping your thoughts? Knowning a little bit about the traders here helps filter what I need to know TODAY and the immediate future. Hopefully know one is misunderstanding my comment
Dear Luna,
Thanks again and I will look if there something tradable in mining stocks to post about.
Best wishes!
Aibek
Thanks Aibek .... I think you were dead on the money & no one has come back to acknowledge your wisdom! The BREAK Out did ACURE guys! Now what are your thoughts readers... Are you willing to run with it if only for a few days? I play stocks and love CDE on the NYSE... I am in Atlanta, Ga...US . I wish Gold &n Silver followers would say where they are from and what they trade... This in itself will give all of TRADERS better insight AS TO WHAT YOUR THOUGHT PROCESS IS!
AGAIN thanks Aibek
Dear Luna,
Thank you for a warm feedback!
Interesting but the PM "market" is rigged so all this analysis will come to naught. Every time true market conditions begin to move PMs higher, especially gold and silver, they are hammered back down via (unlawful) naked shorts (paper). Until that stops all the traditional analysis in the world means nothing.
Dear Frank,
Thank you for sharing your thoughts.
The entire world has it's own regularities and I just share some of my thoughts about the small part of it.
Best wishes,
Aibek
Dear Aibek,
in your support, I would like to add one more thing, and that is, "One must include all possible effects and probabilities of manipulations and traps in his study."
Rasesh Shukla - India
Dear Aibek,
First of all, Purely in a friendly manner, i would like to ask one out of practice, but simple question that are you "Born Bull? why are you constantly trying to search or identify Bull Signals only?
As far as last Historical Bull Run in both Gold and Silver is concerned,in the last face of precedent Bear run ended with Bottom formation of Gold at $ 251.95 on Dt. 27-08-1999 but Bottom formation of Silver was far late, and that was at $ 4.05 on Dt. 23-11-2001. There after, in the last Bull Run taken place, and formed their "All Time Highs" in both Gold and Silver.
On the other side, that bull Run of Gold is quite longer then of Silver, and lasted for 4393 Days, against of 3440 Days of Silver Bull run, However, Silver Bull run was quite shorter. but far more stronger then of Gold, and that was too, more then double return compare to Gold. Silver delivered an Annualized Returns of 119.93% against which, Gold has delivered quite lower Annualized Return of 55.02%
Above study clearly point-out that Bull as well Bear pasterns and time frame of both Gold and Silver is quite different, and so it is advisable to avoid any prediction on the basis of co-relation there between.
Finally i repeat ones again that either in Gold or in Silver, no significant turn around or trend changing signals appeared so far as any remarkable or major Bull Run is concern. still there is a strong possibility of forming further new or fresher lower bottoms with on going Bear Trend continuation, for both Gold and Silver.
Dear Rasesh,
I really appreciate that you share your time to write such a particular comment with reasonable explanations.
I was "Born Bull" only for our Invaluable Life! As I told many times - we shouldn't be biased, it's too expensive.
My recent posts with daily/4h charts contain bullish setups as long as we broke above the medium term resistance and are tactical.
My earlier posts with monthly charts where you put your valuable comment show that there is a possibility that this is just a complex correction and we can dip lower after touching some higher levels.
So, all depends on the time frame we choose. And I would like to remind that monthly charts are slow to change and therefore are less frequent in my posts.
Your valuable observations support the idea I posted earlier about the Gold/Silver ratio behavior as you counted different periods of their bull and bear cycles.
I can only repeat words from one of my earlier post that the silver was sold to a deeper retracement level compared to gold and that puts silver ahead of gold in global positioning as market tends to gain on imbalances.
Liquidity of the silver market is far more poor than that one for gold market and it causes these overshoots in silver behavior which are clearly seen in the gold/silver ratio chart.
Best wishes,
Aibek
Dear Aibek,
Thanks for such nice and detailed reply.
I am fully agree with you about the importance of Time Frame, because normally Traders never bother about any mid or long term move, so there was good and many opportunities for traders between the range, taken place at around $ 1050 to $ 1350.
I think, some interesting movement may take place after January 2nd weak.
With warm regards,
Rasesh.