…If the volume and interpretation are on point, then July should act as a cap on gold prices for many months to come until buyers are able to overcome sellers. Even if price were to rally above 1,400, there is still a wide band of resistance to impede rallies. For as much as we favor – and expect – eventual higher prices for gold, the charts do not indicate it will be any time soon. [The following charts show you why.]
The comments above and below are edited ([ ]) & abridged (…) excerpts from an article by Michael Noonan (EdgeTraderPlus.com) to provide a faster and easier read.
Gold Chart – Monthly
…The highest volume – ever – occurred in July [see chart below], yet the bar range was very small. This tells us that sellers were overwhelming buyer’s effort to move gold higher. Buyers failed. The volume effort was not even enough to retest 1,400.
All of this can change at any time should some crises occur to propel gold higher, but that would be a future event that has not yet happened, and any analysis can only take into account that which is, with no concern for that which cannot be known in advance, at least in terms of timing.
Gold Chart – Weekly
The weekly perspective shows an immediate uptrend since November of 2015, but
over the span of the entire chart, the activity is a broad TR event. 1,300+ is support, as of last week, but it would not take much to breach that level and move lower to retest 1200. The next few weeks should provide more clarity as to what may unfold near term.
We pointed out the larger volume effort has been on up days, but price is nearer the TR lows since the strong June rally. For all of the effort spent, there has been no upside payoff over the past three months, and our note of caution stems from what the market is indicating, not what people are saying. The market is always the final arbiter.
Gold Chart – Daily
Silver – Monthly Chart
Silver is considered by many to be fundamentally much more bullish than gold, yet the monthly chart [below] shows price is languishing as it seeks to establish a low.
The recent low may well hold, but that does not mean price can move in a much longer TR over the next several months to even another year. Should something happen to catapult price higher sooner, great, but the charts are not showing a dynamic move is coming any time soon.
Silver – Weekly Chart
The near term trend is up since the December 2015 low, and last week’s outside reversal could act as support, but there is still a few months of overhead activity that will act as a buffer for the immediate few weeks ahead.
Silver – Daily Chart
Price held well above a 50% retracement on the weekly, but is failing to reach a 50% retracement rally on the daily. There is no synergy between the various time frames, and that accounts for the more cautionary read for what price may do in the remaining months for 2016.
All of the above analysis pertains to the paper market, one that is heavily manipulated. The physical prices reflect the paper market, but wholesale recommendation to keep buying physical gold and silver is without any concern for what the paper market is
We always recommend buying to have, but the sense of urgency for being fully invested has room to be more select over the next few months.
We could be wrong…[so] one should remain true to their buying physical strategy for reasons other than price. The most prevalent reason would be political, coming from governmental interference of some kind. That is always a wild card.
Disclosure: The above article has been edited ([ ]) and abridged (…) by the editorial team at munKNEE.com (Your Key to Making Money!) to provide a fast and easy read.
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