While the odds may favor a rally in gold and silver, the trend could very well negate that interpretation. Always go with the trend – the charts do not lie – and this is what they are saying about the current situation.
By Michael Noonan (edgetraderplus.com). The following is an abbreviated version of the article* as originally posted under the title Gold And Silver – A Telling View Through ETF Charts.
Silver: Weekly Chart
The takeaway on weekly silver is a lack of defining activity to indicate that the bottoming process is ending. Simply put, there is none. The greater ease of market movement is still on the downside. We call it EDM (Ease of Downward Movement).
As the chart below shows there is an inability for buyers to overcome efforts of the sellers.
Silver: Daily Chart
While it appears price is putting in a better show on the daily chart, Friday’s rally gets lost when compared to its net effect relative to the S/D bar (Supply over Demand) on a significant increase in volume at the end of January. When you think of volume as a source of energy driving the market, compare the next 11 TDs and consider how all of that effort failed to negate the S/D bar. It is hard to be enthusiastic about Friday when put in that context.
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Gold: Weekly Chart
Chart comments spell out how to view weekly gold. One should never lose sight of the fact that gold is in a protracted trading range in a likely, but unconfirmed, bottoming process. Ironically, for all of the possible news/events that can impact the price of gold, whenever price is in a TR (Trading Range), the level of knowledge is at its lowest because price can move in either direction within the TR and not mean anything. This is why it is important to keep a market in its context.
Gold: Daily Chart
..The S/D bar as shown on the daily chart below acted as resistance, and price was unable to rally even to the half-way point of the bar…Look at how weakly price has been, drifting yet lower, unable to mount any challenge to a S/D bar while in a down trend and momentum of price direction. This is yet another example of why knowing the trend is so important.
While we say odds may favor a rally, the trend could very well negate that interpretation. The trend, the trend, it provides important information. Always go with the trend.
[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-a-telling-view-through-etf-charts
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