LONG TERM TREND:                    BEARISH
INTERMEDIATE TERM TREND:    NEUTRAL
SHORT TERM TREND:                  BEARISH
VERY SHORT TERM TREND:       NEUTRAL         

After touching the bottom boundary of the triangle that has been forming on the daily chart during 2014, gold bounced as predicted and found resistance at the convergence of the 20 and 100 DMA at 1296. 

This morning, gold is falling and a retest of the lows at 1273 look likely.  A break of this level would be a bearish development and suggest a move back towards 1240.  However, a break through the confluence of moving averages on the daily chart between 1296 and 1306 would give the bulls some cheer and target a move towards 1325.

Equities remain at new all time highs and, with the dollar holding above 82.5 and oil floudering far below $100 a barrel, it is not surprising that gold is on the defensive, particularly during the quiet summer months when gold usually drifts downwards - in fact, a case could be made for gold holding up well in the face of such a bearish mix of outside factors.

Support can be found at 1283, 1280, 1273, 1263, 1257-1260, 1250-1252, 1237-1240, 1220-1225, 1210, 1200 and 1180.  A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term - a failure to break the 65 week MA would make this scenario much more likely.

Resistance can be found at 1290-1292, 1300-1302, 1310-1312, 1322-1325, 1333-1335, 1340-1342, 1352-1354, 1392-1395, 1400, 1420 and 1435.  A second failure to break through the key 65 week MA would suggest that the intermediate down trend is intact and a retest of 1240 and possibly 1180 is likely.

Today's video for subscribers looks at the recent trading in more detail and our strategy for our next trade.

Gold continues to consolidate in the triangle pattern on the daily chart that has formed during 2014, with the price touching the lower boundary at 1273 on Thursday last week.

The price has been struggling to break above the 65 week MA and the long term down trend line for the past couple of months and remains at a crucial juncture - in simple terms a break above 1350 would be very bullish for the longer term and a break of 1240 would suggest a return to 1180 and a continuation of the bearish trend.

Equities and the dollar have both rallied hard in recent trading sessions, putting gold under pressure, whilst oil is struggling to hold above $94 a barrel, adding to the bearish picture.

Gold tends to perform well in September and with the price at the lower boundary of the triangle and equities becoming overstretched, we could see a rally develop from here.

Support can be found at 1273, 1263, 1257-1260, 1250-1252, 1237-1240, 1220-1225, 1210, 1200 and 1180.  A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term - a failure to break the 65 week MA would make this scenario much more likely.

Resistance can be found at 1288, 1291-1292, 1300-1302, 1310-1312, 1322-1325, 1333-1335, 1340-1342, 1352-1354, 1392-1395, 1400, 1420 and 1435.  A second failure to break through the key 65 week MA would suggest that the intermediate down trend is intact and a retest of 1240 and possibly 1180 is likely.

Today's video for subscribers looks at the recent trading in more detail and our strategy for our next trade.

Gold & Silver Trading Alert originally published on August 20th, 2014 11:19 AM:

 

Briefly: In our opinion no speculative positions in gold, silver and mining stocks are now justified from the risk/reward perspective.

The back-and-forth trading in the USD Index ended as it pierced through the short-term resistance and also above this year’s high. As we have emphasized many times previously, the U.S. currency is after long-, medium- and short-term breakouts so the surprises should be to the upside. Consequently, yesterday’s rally was not unexpected. What was surprising was the lack of real decline in the precious metals sector. Does this mean that the USD rally won’t hurt gold and silver investors? Let’s take a closer look (charts courtesy of http://stockcharts.com).

The above chart clearly shows that there was indeed a breakout. At the moment of writing these words, the USD Index is slightly above the 82 level. Is this the time to get excited about the strength of the U.S. dollar? Not really. The breakout will need to be confirmed first. We would like to see 2 additional closes above the broken resistance before we think that the continuation of the rally is very probable. It’s already probable, but the odds will increase once we see a confirmation.

Please note that the U.S. currency was strong enough not to really decline at the most recent cyclical turning point. Instead, we saw only a small local top that was followed by a consolidation. This type of flat correction is something that characterizes strong uptrends, so it seems quite likely to us that the rally will be continued. The odds will further increase if yesterday’s breakout becomes confirmed.

Consequently, the USD Index will likely put bearish pressure on the precious metals sector and once the breakout is confirmed, this will become very likely. Gold and silver are currently at a critical juncture and this pressure might be the thing that “helps metals to decide in which way to go”.

Silver, on the other hand, provides the support line. The white metal is not (yet) at its previous lows, but it’s already at the support line that is created by connecting these lows. Once this support is broken, the decline is likely to accelerate. If silver breaks below the previous lows, we could see a very sharp move into our target area. Will this happen soon? There are no certainties, but it’s becoming more and more likely that we will see this type of action in the following weeks or months.

What’s the most likely outcome for the following days? In our opinion we could see a verification of the breakout in the USD Index in the form of a pullback, which would cause a temporary upswing in gold and – especially – silver. Then the rally in the USD would continue and so would the decline in the precious metals sector. Of course, there are no guarantees, but the above is our best guesstimate at the moment.

The above-mentioned corrective upswing in metals could provide a confirmation that the big decline is about to start – for instance if we see silver’s outperformance and/or miners move higher on tiny volume.

Summing up, the situation in the precious metals market still remains too unclear to open any positions in our view, but it seems that we won’t have to wait too long before things clarify and the risk/reward ratio becomes favorable enough to open a trading position.

To summarize:



Trading capital (our opinion): No positions

Long-term capital (our opinion): No positions

Insurance capital (our opinion): Full position



You will find details on our thoughts on gold portfolio structuring in the Key Insights section on our website.

 

As always, we'll keep our subscribers updated should our views on the market change. We will continue to send them our Gold & Silver Trading Alerts on each trading day and we will send additional ones whenever appropriate. If you'd like to receive them, please subscribe today.

 

Thank you.

 

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments - SunshineProfits.com

Tools für Effektives Gold- und Silber-Investment - SunshineProfits.DE

 

 

* * * * *

 

 

Disclaimer

 

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Gold & Silver Trading Alert originally published on August 13th, 2014 6:35 AM by sunshineprofits.com

Briefly: In our opinion no speculative positions in gold, silver and mining stocks are now justified from the risk/reward perspective.

When one looks at gold and silver prices and their moves yesterday, it might seem that nothing happened in the precious metals market. That’s far from the truth because the real action took place in mining stocks. Several weeks ago, it was miners’ strength that heralded the rally in the whole sector. Will we see one also this time? Let’s start with mining stocks (charts courtesy of http://stockcharts.com).

Miners moved higher and the volume that accompanied this move was rather average. It was not high enough to confirm the direction of the move by itself, but it was not low enough for us to say that the move was fake.

The fact that miners rallied without a rally in gold or a decline of the dollar is bullish for the short term. Consequently, we plotted an additional resistance line on the chart, in case GDX moves above its July high. The next resistance is close to the $28.50 level, at the September 2013 high.

There is little to comment on for gold as far as closing prices are concerned – there was a tiny – 0.08% - move higher, practically nonexistent. The interesting phenomenon was the intra-day decline right before the markets closed in the U.S. It caused the entire day to become a daily reversal – similar to the one that we saw on Friday. These reversals are bearish signs for the short term that contradict the bullish signal from mining stocks.

Consequently, even though the situation for mining stocks improved, it overall remains unclear and, in our opinion, it is still too risky to open a speculative position here. We realize that markets and our take on this situation might seem boring, but ultimately we are not investors and traders for the excitement, but for the growth of our portfolios, and it seems to us that at this time the risk that we would expose ourselves to by opening a position outweighs the potential profits that we could make.

As far as the USD Index is concerned, we can comment on it exactly in the same way as we did yesterday.

The difference is that we are one additional day after the cyclical turning point in the USD Index and, at the same time, the index is one additional day within the horizontal consolidation pattern.

 Consequently, what we wrote yesterday is not only up-to-date, but actually, the implications are a bit stronger:

 The situation in the USD Index is still a bullish factor for the precious metals sector. The U.S. dollar is after a sizable rally and right after the turning point, which is likely to cause at least a small decline.

If the USD Index doesn’t decline in the next several days, it will prove the dollar’s strength. We saw a sizable rally in July and if the US dollar is able to hold these gains and only correct in a mild, horizontal way, then we will likely see another big upswing shortly. For now, the index is still close to the cyclical turning point, and thus prone to a corrective downswing.

 Please note that with each passing day, the USD Index is getting further from the turning point, and the odds for a decline diminish. Another reason is that we are already seeing a consolidation pattern in the index – we are no longer “extremely likely” to see at least a pause, as we are already seeing it. The RSI indicator is once again below the 70 level, so the situation is no longer overbought on a short-term basis.

 Taking all the above into account, we can summarize the current outlook in the same way as we did yesterday.

 Summing up, it seems that even though the next big move in the precious metals sector is still likely to be to the downside (we have not yet seen actions that are usually seen at important bottoms, like huge under-performance of silver [what we saw this week was not huge enough], and gold is not actively hated in the mass media), the odds for a corrective rally are relatively high.

 The USD Index is [still, but less with each passing day] likely to decline at least a little, which is likely to cause a rally in the precious metals sector. However, let’s not forget that the USD Index is after long-, medium-, and short-term breakouts, so this corrective downswing could be small and temporary – the next big move is likely to be to the upside. The opposite seems likely for the precious metals sector.


We plan to re-enter short positions when we see either a small rally an some kind of confirmation that the next local top is in. At this time, we prefer to say out of the market. The situation simply seems too unclear and risky to open a speculative position.

To summarize:

Trading capital (our opinion): No positions

Long-term capital (our opinion): No positions

Insurance capital (our opinion): Full position

You will find details on our thoughts on gold portfolio structuring in the Key Insights section on our website.

As always, we'll keep our subscribers updated should our views on the market change. We will continue to send them our Gold & Silver Trading Alerts on each trading day and we will send additional ones whenever appropriate. If you'd like to receive them, please subscribe today.

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments - SunshineProfits.com

Tools für Effektives Gold- und Silber-Investment - SunshineProfits.DE

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Following Friday's surge higher on geopolitical woes, gold has failed to build on the breakout of the down trend channel and yesterday made a "lower high" at 1318.  The metal saw another "shooting star" candlestick form on the daily chart to suggest the bulls are having trouble maintaining the upward momentum.

The trading is quiet and directionelss, typical of this time of year which is often dubbed the "summer doldrums" due to the lack of trading volume and narrow ranges.

Equities remain well off all time highs and traders will be watching closely for signs of a more significant top developing, however the dollar remains well supported and is trading clear of 81.50 after a strong rally.

Support can be found at 1302-1306, 1295-1297, 1286, 1280, 1274, 1263, 1257-1260, 1250-1252, 1237-1240, 1220-1225, 1210, 1200 and 1180.  A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term - a failure to break the 65 week MA would make this scenario much more likely.

Resistance can be found at 1310-1312, 1322-1325, 1333-1335, 1340-1342, 1352-1354, 1392-1395, 1400, 1420 and 1435.  A second failure to break through the key 65 week MA would suggest that the intermediate down trend is intact and a retest of 1240 and possibly 1180 is likely.

Today's video for subscribers looks at the recent trading in more detail and our strategy for our next trade.

Gold powered higher on Friday, bouyed by dollar weakness and geopolitical uncertainty, particularly in the Middle East, though also in Russia/Ukraine.  Gold made a high at the key 1322 level that has been such an important pivot for the yellow metal since the April 2013 crash before retreating back to close the week around 1310.

This price action formed a "doji" on the daily chart that suggests a short term top may be in place, however the favoured Elliot Wave scenario is that we are just starting a new bullish leg after a "double 3" correction - the local top could therefore be the Wave 1 peak, with Wave 2 underway.

We need to keep an eye on both equities and the dollar - continued equity weakness coupled with further dollar selling would be very bullish for gold, however a continuation of the long term equity rally will see gold back under pressure again.

We are also in the midst of the "summer doldrums" period for gold, where prices tend to drift swideways with a downward bias before finding renewed buying interest in the September, followed by a pause in October before a strong end to the year.

Support can be found at 1302-1305, 295-1297, 1286, 1280, 1274, 1263, 1257-1260, 1250-1252, 1237-1240, 1220-1225, 1210, 1200 and 1180.  A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term - a failure to break the 65 week MA would make this scenario much more likely.

Resistance can be found at 1310-1312, 1322-1325, 1333-1335, 1340-1342, 1352-1354, 1392-1395, 1400, 1420 and 1435.  A second failure to break through the key 65 week MA would suggest that the intermediate down trend is intact and a retest of 1240 and possibly 1180 is likely.

Today's video for subscribers looks at the recent trading in more detail and our strategy for our next trade.

Gold surged higher yesterday on geopolitical tensions, breaking through the upper boundary of the short term down trend channel convinicngly and challenging the 65 week MA again to keep the bulls hopes alive of a reversal in the intermediate term bear market. 

Gold has potentially completed an "ABC-X-ABC" correction and started a new wave higher, though there is significant resistance above and a surging dollar may yet cap gold's advance.  We must also keep an eye on equities, as we maintain our stance that we need a meaningful correction in stocks to see a strong rally in gold.

Gold has bounced off the 61.8% retracement level at 1280 and looks primed to rally towards 1325 in the first instance.

Support can be found at 1302-1305, 295-1297, 1286, 1280, 1274, 1263, 1257-1260, 1250-1252, 1237-1240, 1220-1225, 1210, 1200 and 1180.  A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term - a failure to break the 65 week MA has made this scenario much more likely.

Resistance can be found at 1310, 1318-1322, 1325-1326, 1333-1335, 1340-1342, 1352-1354, 1392-1395, 1400, 1420 and 1435.  We appear to be witnessing a second failure to break through the key 65 week MA - this would suggest that the intermediate down trend is intact and a retest of 1240 and possibly 1180 is likely.

Today's video for subscribers looks at the recent trading in more detail and our strategy for our next trade.

Gold & Silver Trading Alert originally published on August 6th, 2014 8:48 AM by sunshineprofits.com

Briefly: In our opinion no speculative positions in gold, silver and mining stocks are now justified from the risk/reward perspective.

Yesterday’s price action in the precious metals market was very specific. Gold declined very little, silver declined much more, and mining stocks moved a bit higher. When we see a mirror image of such action (gold pauses, silver rallies and miners decline a bit), it’s usually a sign of a top. Have we just seen a local bottom? Let’s take a look at the charts (charts courtesy of http://stockcharts.com), starting with silver. 

In short, the self-similar pattern remains in place. At this time the pattern is proportionately bigger, but remains similar in terms of shape. Big declines in the precious metals sector have been very often preceded by silver’s short-term outperformance, even if this outperformance was preceded by a visible downswing in the price of the white metal. What we saw in February and March serves as a perfect example.

Why has silver underperformed recently? As always, there is no clear explanation behind any price move (other than because someone pushed the “sell” button), but it seems to us that it can be in a large part attributed to the sharp decline in the general stock market.

If we are just seeing the beginning of another huge decline, then we are still quite likely to see a sharp rally in silver, just before the big drop. In other words, what we have written about the silver market previously remains up-to-date:

The current situation is similar to what we saw in March. Silver declined after a local top was formed close to the turning point, then bounced a bit and then it moved a bit below the previous low. Back in March it rallied for a few days only to disappoint and plunge shortly thereafter. This scenario seems quite probable at this time, not only because of the similarity on the above SLV ETF chart but also because of the situation in the currency markets.

Turning to the yellow metal, we see no new low. Gold has basically remained where it closed on Monday, which is a sign of strength, given that the USD Index moved a bit above its previous high. Overall, what we wrote yesterday remains up-to-date:

The trend is down for both the short and medium term, but since gold has not declined as much as it “should” based on the dollar’s rally, it still seems likely that a correction is just around the corner.

Mining stocks remain above the declining support line, which means that the situation in this part of the precious metals sector hasn’t changed much. Actually, the situation improved a little, because miners could have declined based on Friday’s big intra-day reversal – and they didn’t. With this negative factor out of the way, we are left with the support line as a bullish factor.

All in all, the situation is unclear for mining stocks – but with a bullish bias.

Gold jumped on Friday after a weaker than expected Non Farms Payroll number saw the dollar tumble, however this type of "knee jerk" reaction almost always retraces entirely within a day or two and we alerted subscribers to this shorting opportunity.

Gold is clearly still entrenched in a down trend, with a series of lower highs and lower lows on the 4 hour chart - rallies should be seen as opportunities to open new short positions, the failure to break the 65 week MA is a significant blow to the bulls and confirms the long term trend remains down.

The dollar continues to power higher and, worryingly for the bulls, gold appears unable to capitalise on the recent correction in equity markets.  Oil has tumbled below $100 a barrel in recent trading sessions, adding to the overall bearish picture for gold.

Support can be found at 1286, 1280, 1274, 1263, 1257-1260, 1250-1252, 1237-1240, 1220-1225, 1210, 1200 and 1180.  A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term - a failure to break the 65 week MA has made this scenario much more likely.

Resistance can be found at 1295, 1302-1305, 1310, 1318-1322, 1325-1326, 1333-1335, 1340-1342, 1352-1354, 1392-1395, 1400, 1420 and 1435.  We appear to be witnessing a second failure to break through the key 65 week MA - this would suggest that the intermediate down trend is intact and a retest of 1240 and possibly 1180 is likely.

Today's video for subscribers looks at the recent trading in more detail and our strategy for trading this down trend.

Gold broke below the 20 DMA yesterday, tumbling below last week's low at 1287 and falling as far as 1280 before finding some support.  This level coincides with the 61.8% Fib retracement and the bottom of the down trend channel so it is not surprising that the price found some buying interest here.

Yesterday's trading session saw equities down sharply, with oil and other commodities joining the rout and the dollar benefitting as we witnessed a "flight to safety".  It is disconcerting that gold could not capitalise on this "safe haven" trade as it fell sharply alongside other risk assets.

We maintain our bearish stance on gold and a break of 1274 would suggest a return to 1240 was on the cards.

Support can be found at 1280, 1274, 1263, 1257-1260, 1250-1252, 1237-1240, 1220-1225, 1210, 1200 and 1180.  A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term - a failure to break the 65 week MA would make this much more likely.

Resistance can be found at 1292, 1302-1305, 1310, 1318-1322, 1325-1326, 1333-1335, 1340-1342, 1352-1354, 1392-1395, 1400, 1420 and 1435.  We appear to be witnessing a second failure to break through the key 65 week MA - this would suggest that the intermediate down trend is intact and a retest of 1240 and possibly 1180 is likely.

Today's video for subscribers looks at the recent trading action in more detail and our strategy for our next trade.