GOLD AND SILVER TRADE ALERT (2:00 pm EDST)
Gold making a new weekly low Tuesday and negating its bullish divergence to silver was a warning that lower prices could follow, and indeed, that is happening today. Both gold and silver most likely started new medium-term cycles on Aug, 9 with gold's low at $1693 and silver's low at $23. We are now seeing the first sub-cycle correction in these new (young) cycles. Even with today's big price drop, gold's correction is still above the start of its cycle ($1693) and is still within the range of a normal correction. In other words, gold could still be bullish here, as long as it doesn't close below $1740. A close above $1767 tomorrow would also help the bullish case.
Silver's situation is more bearish right now. Silver prices today are testing the $23 level, which was the start of silver's medium-term cycle. If this turns out to be a double-bottom, then silver could still be bullish. If silver is still completing an older cycle (i.e. if Aug. 9 was NOT the start of a new cycle) and it bottoms here, then that also could be bullish. But if Aug. 9 WAS the start of the cycle and prices continue to fall, that would mean the new cycle is turning bearish and would be headed lower for at least two more months.
I suggested a stop loss parameter for our silver trade based on a break below $23. That is happening today, so we should sell our silver position now. While gold is still above $1740, silver's potential bearishness could bring down both metals, so I am going to sell my gold position here as well. We are taking a loss on both of these, but we may go back in and buy if gold stabilizes above $1740 and silver forms a double-bottom. For now I am selling my long positions in both gold and silver.
Gold making a new weekly low Tuesday and negating its bullish divergence to silver was a warning that lower prices could follow, and indeed, that is happening today. Both gold and silver most likely started new medium-term cycles on Aug, 9 with gold's low at $1693 and silver's low at $23. We are now seeing the first sub-cycle correction in these new (young) cycles. Even with today's big price drop, gold's correction is still above the start of its cycle ($1693) and is still within the range of a normal correction. In other words, gold could still be bullish here, as long as it doesn't close below $1740. A close above $1767 tomorrow would also help the bullish case.
Silver's situation is more bearish right now. Silver prices today are testing the $23 level, which was the start of silver's medium-term cycle. If this turns out to be a double-bottom, then silver could still be bullish. If silver is still completing an older cycle (i.e. if Aug. 9 was NOT the start of a new cycle) and it bottoms here, then that also could be bullish. But if Aug. 9 WAS the start of the cycle and prices continue to fall, that would mean the new cycle is turning bearish and would be headed lower for at least two more months.
I suggested a stop loss parameter for our silver trade based on a break below $23. That is happening today, so we should sell our silver position now. While gold is still above $1740, silver's potential bearishness could bring down both metals, so I am going to sell my gold position here as well. We are taking a loss on both of these, but we may go back in and buy if gold stabilizes above $1740 and silver forms a double-bottom. For now I am selling my long positions in both gold and silver.
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