…Friday [June 3rd] could well be the game-changer so many have been anticipating. Everything in developing market activity has to fit into a context, and our read for gold and silver has been guardedly bullish. Friday may have been the final trigger to resume the rally from last November and confirm a bottom is in.
A guest post by Michael Noonan, (EdgeTraderPlus.com) which has been slightly edited ([ ]) and abridged (…) to provide a faster and easier read.
It is important to have synergy in the time frames to ensure market activity is wholly in unison and direction, for that is what a trend requires. If the assessment is on target, the last 4 months of sideways action has created a base from which a launch into higher prices has enough “energy” to eventually attack the 2011 highs. There is no timetable, should this prove to be the case, but it seems that events are happening at faster speeds, the rise in PMs being the only exception…
Chart comments apply.
Prior to Friday, price traded sideways in a clustering of closes. That usually leads either to a pause before continuing the initial direction, which has been lower, or, it can lead to a turnaround. Friday’s upwardly launched rally had all the earmarks of a momentum move in that direction. It could very well have been a pivotal day.
Anyone who follows the market’s lead had good reason to follow along in that rally. Smart money does not like company, and the size and quickness of the rally may have scared off many from jumping in. Follow-through next week should not fizzle, otherwise, it could lead to more PMs disappointment.
An Axis Line is one that once was previous support, as seen on the left side of the chart, and the same price level become resistance in future retests. It does not pay to get too far ahead of events, so we take developments one week at a time, sometimes even a day at a time. One will not miss any move any the process, so patience has merit. Given events as they are, as of last week, with continuation next week the Axis Line is not a viable target.
When we say the “character” of a market’s move, we mean the quality of developing market activity. In an up move, one looks for wider ranges, upper end closes, all on increasing volume. On the days of correction, ranges tend to be smaller and volume reduces, sometimes considerably.
How price responds to Friday’s potential turnaround rally will be an important tell, and the market will provide all of the information needed to make the necessary analysis and take the appropriate action.
Friday’s impressive rally screamed Buy! Now we get to see if the market will deliver on its message of apparent strength.