We are again seeing more and more experts and non-experts calling for the bottom for gold and silver, but none can confirm (i.e. establish the truth or correctness of something previously believed, suspected, or feared to be the case or to state with assurance that a report or fact is true) it as a proven fact. Few realize how important it is to have confirmation that one’s position is correct and will be profitable. It is confirmation that gives validity to a prior market move/event. This is the theme of our analysis, today.
…We do not believe there is anyone who can state with certainty, or as fact, that the bottom is in for gold and silver. There are many opinions based on strong beliefs, but beliefs and reality are not always the same. Beliefs are often lacking in proven facts, but that is a different discussion. The point to be made here is that there is no confirmation that a bottom exists for gold or silver.
Gold – Weekly Chart
The weekly chart below shows large areas of overhead resistance that gold must overcome. How is the current rally any different from the similar one back in January 2015? That rally was not confirmed, and price continued $250 lower. It takes time for bottoms to form. Can this time be different? absolutely! However, to be different, newly developing market behavior must confirm past developed market behavior, and that confirmation is absent, to date.
Gold – Daily Chart
The daily chart below actually gives possible confirmation the two month rally underway may be about to undergo downside reaction. See the swing high from mid-October 2015 and the failed retest rally near the end of October with a wide range bar lower…
Friday’s rally is retesting the failed rally area from October 2015. We see the widest range bar and the highest volume of the rally on the same day, last Friday. The important tell, or clue, comes from the location of the close: just under mid-range the bar, barely higher than the day’s open, and almost at the previous day’s close.
For all of the buyer energy exerted, the close was weak, as described. This tells us that sellers overwhelmed the effort of the buyers and pushed price well off the highs of the day. Those who sold last October 2015 are defending their short positions is the explanation why price reacted as it did. A price reaction lower, next week, would confirm the fact that a previous failed high held/checked the current rally.
Silver – Weekly Chart
Silver’s rally has the look of a possible extended rally, but the 2 strong sell bars from last October could spell trouble, similar to what gold showed, above. Markets are always testing and retesting previous market activity. For as positive as the potential is for a price rally and close above 12 weeks of sideways movement, silver is still coming from a level of weakness and without a confirmed bottom in place.
Silver – Daily Chart
The daily chart below backs up the observation from the weekly chart. Price made a new recent rally high but closed lower than the previous day while at a 50% retracement/potential resistance area. In down markets, half-way retracements tend to check rallys. What happens in the next several trading days will confirm, one way or the other, a failed swing rally high or a rally breakout. Money is made by following the market’s proven and confirmed behavior.
The information gleaned from chart market activity, in the form of price/volume behavior, is telling us that no bottom has been confirmed, factually speaking. Keep buying the physical.
[The original article, as written by Michael Noonan (edgetraderplus.com), is presented here by the editorial team of munKNEE.com (Your Key to Making Money!) and the FREE Market Intelligence Report newsletter (see sample here – sign up in the top right corner) in an edited ([ ]) and abridged (…) format to provide a fast and easy read.]
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Each of the following charts on gold and silver contain their own message related to price volume behavior that has a convincing element of reason… See if you agree.
For all the information the following charts convey, it is not unfair to suggest price is likely to go lower, nor it is unfair to expect anyone armed with this knowledge to be disappointed that gold and silver are not going higher, for now.