PRECIOUS METALS UPDATE and SILVER TRADE ALERT (11:30 pm EDT)
In my many years of trading I have rarely seen financial markets as nervous, unstable, and as volatile as they are now, and yes, this makes them harder to call. Fortunately, cycle studies, timing signals and technical analysis gives us tools to adjust our trading strategies when necessary so we are never lost, even when the markets throw us curve balls. The precious metals are especially tricky to call right now as gold and silver have suddenly shifted their directional trend (from bearish to bullish) over the last few weeks. It is important to note that this may be a short-term shift as the final bottom in the long-term cycles of these two metals may still be coming later this year or early next year. Last week gold and silver broke through important resistance levels which means that both of their medium-term cycles are now pointing up (i.e. bullish trend with a potential for new highs). Nevertheless, gold's medium-term cycle is nearing completion so we need to be watching for a final high in prices and then a sharp correction to the cycle bottom. After analyzing the precious metal charts this weekend, I can see that there is the potential for both a short-term bullish as well as a bearish scenario:
BULLISH: Last week I mentioned the importance of the $1232 resistance level in gold. If gold prices can stay above $1164 this week then there is a good chance they will rally and break through that resistance. This is the scenario I favored after gold's surge last week, but I am not so certain now that it will pan out.
BEARISH: Gold prices peaked at $1191.70 last week and turned down within a strong reversal zone. This means prices could continue falling this week. If they break below $1164 they could continue down for at least two more weeks. In this scenario gold could find support around $1150 and rally back up, but prices would not likely exceed $1232 (maybe not even $1191) before turning back down again.
I may have been premature in buying silver last Thursday. Even though silver's cycle is pointed up, last week's reversal zone could first push prices down into a brief but significant correction before rallying to new highs. We have a tight stop loss on our long position at $16 which should be triggered if prices open under $16 tomorrow. Any traders who did not apply a stop loss may want to place a sell order for tomorrow's market opening. Prices closed on Friday close to our buy spot so we should be able to pull out with minimal loss. I apologize for such a short-term trade which is not a normal strategy for me (I am not a day trader), but I think it would be prudent here to avoid a possible steep correction in this highly volatile market. Selling my long position in silver tomorrow (Monday) morning.
In my many years of trading I have rarely seen financial markets as nervous, unstable, and as volatile as they are now, and yes, this makes them harder to call. Fortunately, cycle studies, timing signals and technical analysis gives us tools to adjust our trading strategies when necessary so we are never lost, even when the markets throw us curve balls. The precious metals are especially tricky to call right now as gold and silver have suddenly shifted their directional trend (from bearish to bullish) over the last few weeks. It is important to note that this may be a short-term shift as the final bottom in the long-term cycles of these two metals may still be coming later this year or early next year. Last week gold and silver broke through important resistance levels which means that both of their medium-term cycles are now pointing up (i.e. bullish trend with a potential for new highs). Nevertheless, gold's medium-term cycle is nearing completion so we need to be watching for a final high in prices and then a sharp correction to the cycle bottom. After analyzing the precious metal charts this weekend, I can see that there is the potential for both a short-term bullish as well as a bearish scenario:
BULLISH: Last week I mentioned the importance of the $1232 resistance level in gold. If gold prices can stay above $1164 this week then there is a good chance they will rally and break through that resistance. This is the scenario I favored after gold's surge last week, but I am not so certain now that it will pan out.
BEARISH: Gold prices peaked at $1191.70 last week and turned down within a strong reversal zone. This means prices could continue falling this week. If they break below $1164 they could continue down for at least two more weeks. In this scenario gold could find support around $1150 and rally back up, but prices would not likely exceed $1232 (maybe not even $1191) before turning back down again.
I may have been premature in buying silver last Thursday. Even though silver's cycle is pointed up, last week's reversal zone could first push prices down into a brief but significant correction before rallying to new highs. We have a tight stop loss on our long position at $16 which should be triggered if prices open under $16 tomorrow. Any traders who did not apply a stop loss may want to place a sell order for tomorrow's market opening. Prices closed on Friday close to our buy spot so we should be able to pull out with minimal loss. I apologize for such a short-term trade which is not a normal strategy for me (I am not a day trader), but I think it would be prudent here to avoid a possible steep correction in this highly volatile market. Selling my long position in silver tomorrow (Monday) morning.
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