People who question the merit of charts are clueless of the information charts accurately convey – the most current portrayal of developing market activity which is, typically, way ahead of the news. Yes, there will be short-term, often short-lived reactions contrary to the prevailing trend, but it is the trend that is the truest “story of the market”. Last week’s read of the charts accurately gave clues for what transpired this past week. Here’s what the charts have to say on gold and silver for the coming week.
By Michael Noonan (edgetraderplus.com). The original unabridged article* as posted on said site was entitled Gold And Silver – Banker’s Grip On PMs Not Over.
Silver: Weekly Chart
At some point silver will lead gold to the upside as is its propensity in bull markets but, at this juncture, we see no clues in the weekly chart below of a turnaround that will prove a new trend higher.
If you are a “non-chartists” the best way to understand why we have come to such a conclusion is to see where price closed last week and then look at the rest of the chart on the left hand side of last Friday’s price, and ask, where does it stand compared to recent past history?
Of the 156 weekly bars on the weekly chart below going back almost 3 years there are only 5 other weekly closes lower than last week. Clearly, the facts of price behavior give evidence of a weak market.
It does not matter what your beliefs may be of the underlying “fundamental” facts. The existing reality of current pricing is all that counts. The difference between the fundamental facts and current price is not in harmony, for whatever reason, but it is how the market, in total, is pricing silver that counts. Always go with existing price as the most accurate measure. Opinions vary. Price is.
Silver: Daily Chart:
Rather than guess and preempt what a market may do, let the market confirm its activity, and then make a decision based on conclusive factual evidence. The evidence of silver being in a down trend favors price weakness, not occasional, and failing, price strength.
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Gold: Weekly Chart
The purpose behind showing the same horizontal lines and bearish spacing, week after week in the weekly chart, is a reminder that, however one may believe that gold is very bullish, the picture on the chart is one of weakness and a factual indication that one’s beliefs are out of line with current market reality. If anyone can come up with an opposing argument that says otherwise, please present it [in the Comment section below].
Gold: Daily Chart
S/D bars are a sign of weakness, especially when accompanied by increased volume, or increased sellers overwhelming buyers. The trend is clearly down.
We put forth the observation that S/D 2 differs from S/D 1 in that the activity following 2 is not as weak as the observable activity that followed 1. Does this mean anything? It possibly means that buyers were more effective opposing sellers, last week. Even if true, the onus is on buyers to continue to prove they can outperform sellers. Will buyers succeed in rallying price above 1235, the high of the S/D 2 bar? If a rally were to ensue next week that failed to surpass that high, it is a message from the market to expect lower price activity, again.
We do not need to guess what may happen before it happens because we deal with the known facts and we see no clues in the above charts of a turnaround that will prove a new trend higher for gold & silver. For now, the most realistic expectation for gold and silver is more of the same.
[The above article is presented by Lorimer Wilson, editor of www.munKNEE.com and www.FinancialArticleSummariesToday.com and the FREE Market Intelligence Report newsletter (sample here – register here) 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. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. This paragraph must be included in any article re-posting to avoid copyright infringement.]
*Original Source: http://edgetraderplus.com/market-commentaries/gold-and-silver-bankers-grip-on-pms-not-over
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