SILVER TRADE ALERT (3:00 pm EST)
Today both silver and gold prices dropped steeply in the morning but snapped back quickly and are now closing the day in the upper part of their day's ranges. Furthermore, gold made a new weekly low but silver did not. This gives us a very strong bullish divergence signal, and it is happening inside our new reversal zone specifically for these metals (Jan. 30 - Feb. 7).
We were expecting a sub-cycle correction in gold to test the 15-day moving average and to be completed by Friday. Today's low in gold did that. Today's low in silver - $23.01 - seems to be a "double-bottom" to last week's low at $22.82, which could have been the final medium-term cycle bottom for silver (which was due last week). Based on all this, I am going to cover (unload) my short position in silver today with a small profit. (We are out of gold, but any traders with short positions in gold should also cover them.) It is probably a good idea to be out of silver this week as tomorrow's FOMC announcements and press conference could create volatility in all the markets, and silver tends to be a very volatile commodity.
If silver prices do drop further, we will look to buy the cycle bottom which is due (overdue) this week inside the current reversal zone (if it didn't happen last week). If a new medium-term cycle in silver has started, prices could be very bullish now.
Today both silver and gold prices dropped steeply in the morning but snapped back quickly and are now closing the day in the upper part of their day's ranges. Furthermore, gold made a new weekly low but silver did not. This gives us a very strong bullish divergence signal, and it is happening inside our new reversal zone specifically for these metals (Jan. 30 - Feb. 7).
We were expecting a sub-cycle correction in gold to test the 15-day moving average and to be completed by Friday. Today's low in gold did that. Today's low in silver - $23.01 - seems to be a "double-bottom" to last week's low at $22.82, which could have been the final medium-term cycle bottom for silver (which was due last week). Based on all this, I am going to cover (unload) my short position in silver today with a small profit. (We are out of gold, but any traders with short positions in gold should also cover them.) It is probably a good idea to be out of silver this week as tomorrow's FOMC announcements and press conference could create volatility in all the markets, and silver tends to be a very volatile commodity.
If silver prices do drop further, we will look to buy the cycle bottom which is due (overdue) this week inside the current reversal zone (if it didn't happen last week). If a new medium-term cycle in silver has started, prices could be very bullish now.
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