Wednesday , 23 July 2014

Gold & Silver Rules of Engagement: IF This Happens, THEN Do That – Here’s Why, Here’s How

Never go against the market. It does not matter what your beliefs are…It does not gold-silvermatter what the fundamentals are either. What matters is the TREND! Once you know the trend is up you need a game plan on how to participate from the buy side and when the trend is down, a plan ion how to participate from the short side.  If there is no trend, then the odds are not favorable for either game plan. So exactly what are the charts saying about the trend in gold and silver these days? Read on!

So writes Michael Noonan (http://edgetraderplus.com) in edited excerpts from his original article* entitled Gold And Silver – Reality Does Not Matter.  Potemkin COMEX Does.

[The following article is presented by  Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Noonan goes on to say in further edited excerpts:

The Trend for Gold & Silver

[Regarding gold and silver,] the market is saying there is a balance between buyers and sellers, at an area where sellers should be dominant. From balance comes imbalance and, as such, we can expect price to move directionally, once the imbalance is triggered.  Probability favors the downside – although probability is not certainty. 

The Daily Chart for Gold

The daily chart [below] is an excellent example of how developing market activity reveals the most likely market direction.  By knowing that the trend is down, it puts how the market has been unfolding into a cohesive process that typifies weak markets.

Even though the trend is down, we do not know how price will react to the potential support area at 1340.  We know the signs to look for, wide ranges down, increased volume, if support is to fail, but until price develops, we cannot make any determination, except to be prepared for the how of then developing market activity.

GCQ D 8 Jun 13

The Weekly Chart for Silver

Silver looks weak, plain and simple.  Note [in the chart below] the inability for any kind of market rally over the past seven weeks.

SIA W 8 Jun 13

The Daily Chart for Silver

Even though the weekly looks weak, one should not take anything for granted.   The daily chart below for silver is more interesting, and it may be the best barometer for what to expect, moving forward.

SIN D 8 Jun 13

[From the above chart] you can see the difference in the price distance from the first box of clustered closes, on the left, and the next one, in the middle. There is very little downside from the last box, relative to the distance between the first two.  Are we getting a market clue that sellers are running out of effort?

Developing market activity may be the truest and best source for reading a market’s intent, but sometimes the understanding is only after some indication of confirmation.  This is why we say to follow the market signals and not try to “predict.”  No one can accurately tell what will happen before it does.  The way to follow the market’s infallible lead [is] to have a set of rules of engagement. “If, Then.”  IF this happens, THEN do that, but only in that order.

The close on 15 April’s sell-off was [the] high-end on the bar, telling us that buyers not only met the effort of sellers but overwhelmed them to get such a strong close.  Under these market conditions, the buyers were “Smart Money,” not the public.  We see more evidence of the same kind of support at 1, in mid-May.

Note the response for the next 12 trading days.  Price stayed in a tight range.  Where were the sellers?  Why didn’t they show up to press price lower when it was to their advantage? Did they finally show up on Friday with a sell-off on increased volume?

Compare volumes 1 and 2 and the difference in range size.  2 has strong volume but the bar range is half the size of 1.  These are market messages.  Sometimes they are hard to comprehend, at least with certainty.  For now, the developing market activity is raising more questions which are not necessarily supportive of a market in decline.

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The Future Direction of Silver

How silver reacts to the potential support bars from 1 and 15 April will give important clues on what to expect as to which force remains in control.  Right now, it is the force of supply, however suspect it may be.  Confirmation is required, either way…

[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]

*http://edgetraderplus.com/market-commentaries/gold-and-silver-reality-does-not-matter-potemkin-comex-does (If you like my article you may want to subscribe to my RSS feed.)

Related Articles:

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3. Silver: Current Risk Not Worth the Upside Potential – Here’s Why

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Other Recent Noonan Articles:

1. What the Charts Say About the Future Price Action of Gold & Silver

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The monthly silver chart does not reflect what could be viewed as ending action for the decline.  If/as price rallies, it may be more of a futures selling opportunity than a sign of recovery.  As the structure stands, odds favor lower price attempts. Read More »

2. Gold & Silver: It Could Get Uglier! Here’s What the Charts Are Saying

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The next chapter [in gold and silver] has yet to be written. One thing is likely to be certain, it will get uglier. The public will not be prepared for what could take a few more years to develop, and the potential for yet much lower prices for both gold and silver. Read More »

One comment

  1. Beware all those that encourage you to divest your PM’s just because the Central Bankers are fiddling with the charts most use to track the relationship of PM’s to the US$.

    I believe we are seeing a Global effort to drive PM’s downward so that the big Central Banks can scoop most of it up at bargain prices, so they can further promote the use of their own paper money!