Best of the Week

Gold, Silver and U.S. Dollar Head and Shoulder Technical Patterns

Commodities / Commodities Trading Aug 20, 2009 - 02:36 AM

Best Financial Markets Analysis Article Everyone is talking about gold shooting to the moon because of the massive reverse head & shoulders pattern forming, not to mention the economy isn’t as good as some of us would like it to be. I put together this quick report to show the bearish side of things for once.

Bearish Points for Gold & Silver:
• Silver looks to be forming a H&S pattern
• Gold made a new high in March and quickly sold off
• Gold’s neckline is angled up which makes for a weaker breakout if it occurs
• The US Dollar looks ready for big rally.

SLV ETF – Weekly Chart
Silver is a great performer but we may have to start looking at shorting precious metals in the coming months if prices start breaking down.

GLD ETF – Weekly Chart
I like to be bullish on precious metals but these charts don’t provide much comfort. I will admit there are bunch of different ways to draw this gold chart which can make it look very bullish. But we cannot forget that the market will hurt the most individuals possible and we must be ready for these moves when they happen. Most traders think gold is going to breakout to the up side because of the economy and the famous Gold Reverse H&S pattern. But if everyone thinks this already wouldn’t everyone already be in gold? Who is going to buy gold to take it to the next level??

Also I want to point out that this reverse H&S has a neckline angled up which in my opinion is not a good sign. It shows the price was allowed to move above the previous pink high to suck in traders/investors as they panic to buy the breakout. Soon after buying gold they get taken to the cleaners as price plummeted. I just know from day trading that this type of head & shoulders pattern is not as accurate to trade and I avoid them (price patterns perform the same in all time frames).

US Dollar – Weekly Chart
Take a quick look at the US dollar. It formed a very nice H&S pattern and broke down to the measured move area quickly. Also this chart looks like a large bull flag and could start to move higher from this support level in the coming months. If this happens we will see precious metal prices drop.

Technical Trader Conclusion:
The precious metals market is under pressure from the US dollar and some major resistance levels. Overall silver is underperforming gold and I look at silver as leading indicator. We are currently in cash waiting for a low risk setup for gold, silver, oil and natural gas.

Hello, I'm Chris Vermeulen founder of TheGoldAndOilGuy and NOW is YOUR Opportunity to start trading GOLD, SILVER & OIL for BIG PROFITS. Let me help you get started.

If you would like more information on my trading model or to receive my Free Weekly Trading Reports - Click Here

If you have any questions please feel free to send me an email. My passion is to help others and for us all to make money together with little down side risk.

To Your Financial Success,

By Chris Vermeulen
Chris@TheGoldAndOilGuy.com

Please visit my website for more information. http://www.TheGoldAndOilGuy.com

Chris Vermeulen is Founder of the popular trading site TheGoldAndOilGuy.com. There he shares his highly successful, low-risk trading method. For 6 years Chris has been a leader in teaching others to skillfully trade in gold, oil, and silver in both bull and bear markets. Subscribers to his service depend on Chris' uniquely consistent investment opportunities that carry exceptionally low risk and high return.

This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Chris Vermeulen Archive

Comments

Post Comment (Moderated)

Subject:

Name:

E-mail address (will not be published):

Comment:

Commenting Issue - If on submitting you are returned to the main Index Page (50% chance) then your comment has not been accepted, Follow below steps for 95% chance of comment being accepted.

Click your browser Back button (from main index page).
COPY your comment text from Comment box (i.e. copy to clipboard).
Press PAGE Refresh - You should see the message "You are not authorized to carry out this operation"
Paste your comment back into the comment text box.
Click Submit - If everything goes okay you will remain on the article page with the message "Your comment was held for moderation and will be reviewed shortly".
If instead you are again returned to the main index page then repeat 1-5, alternatively EMAIL to comments @ marketoracle.co.uk quoting the article number.

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2011 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.