Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold Rally With a Silver Lining

Commodities / Gold and Silver 2011 Apr 30, 2011 - 06:25 AM GMT

By: Przemyslaw_Radomski

Commodities

Best Financial Markets Analysis ArticleThere were plenty of silver linings this week. Silver moved close to the 1980 and the key barrier of $50 and gold is moving to new highs at the moment of writing these words. Before jumping right into gold and silver charts, let’s take a few moments to examine the situation in the Euro Index, as it has been recently highly correlated with gold. We will start with the long-term chart (charts courtesy by http://stockcharts.com.)


In the long-term Euro Index chart this week, we see a breakout above the declining trend channel. The Euro rallied soon thereafter and the question now is “how far it will go?” Taking the chart and RSI level into account, it appears that a move past the 150 level is possible with likely target area close to 152 (2009 high). This would coincide with the upper border of the rising medium term trend channel and would be in tune with an RSI showing an overbought condition as well.

Here, in this very long-term chart, the RSI may send a sell signal but we must keep in mind that this chart is based upon weekly index levels, not daily. Therefore, the point to sell could materialize in a week or two once this RSI sell signal is given.

Looking at the short-term Euro Index chart, we see that both the Euro and gold, which are positively correlated, are approaching turning points. Although this is not precise, the indication is that risky territory is fast approaching. Caution is necessary, as both markets are likely to go higher in the following days, but not much longer.

Moving to the precious metals market, let’s take a look how gold fared – from the long-term perspective.

Unlike in many previous weeks, we have actually seen a new development this time. Note that a small move above the very long-term resistance line is seen, but with the index level just a little above this line, it is not yet cause for great excitement. Now what we would like to see is a continued uptrend, then a decline back to the support line on low volume and finally a continuation of the rally on significant volume.

Until a clear move is seen following the recent small move above the resistance line, it is not clear whether it is a breakout or a fake out so it must be monitored closely. In other words, this small breakout does not invalidate points made earlier.

Moving on to the silver market, we would like to provide you with a follow-up to our previous essay on silver price. In that essay we wrote that the top may be in, however based on the most recent bullish action in gold it seems that silver might indeed move somewhat higher. Please take a look below for details.

In the long term chart for silver this week, we can see just how precisely the target based on the Phi number 1.618 actually was.  Although the $49.73 was not hit exactly, we saw the local top ($49.79) quite close to this level before the US markets opened on Monday.

On April 25th, 2011 we wrote the following:

If this top is going to be similar to the previous major tops that we've seen so far - and we view that as likely, then we will see significant volatility in the following days/weeks and probably a double top of some kind; please take a look at 2006 and 2008 tops in silver for more details. This means that there will probably be another chance to exit the market that would be accompanied by additional confirmations.

On April 28, 2011 we continued:

The volatility is clearly high and silver appears to be on its way to form above-mentioned "double top of some kind". Perhaps it would reach its record $50.35 intraday high. Yes, that is significantly higher from where silver is today, but please note that with this kind of volatility in the white metal, it will not be easy to exit one's position.

The next target level for silver, if it does move above its previous high, could be the 1980 high of $50.35. This should indeed provide a very strong resistance to silver’s rally and without some new support, silver does not seem likely to make it here on its own. Perhaps with soaring stock market and gold moving to new highs, this could be seen but it does not appear at this time to be very likely. Indications are that the local top is close.

Still, given the current volatility (which is not likely to decrease soon) in the silver market, it seems that confirmations from other markets will be key to properly assessing whether the final top is in or not. We will leave this part of the analysis to our Subscribers.

Before summarizing, please take a look at one of our indicators that flashed a buy signal recently.

Our indicator detecting short-term bottoms has flashed a buy signal on April 27th, 2011 which - given its previous performance - is something that should not be ignored.

This indicator did a good job of signaling i.a. the March bottom and also the prior one seen in January –February to name only a few. We were likely at a short-term bottom in the precious metals sectors (right after Monday/Tuesday decline), but please note that this indicator has a short-term nature meaning that it was designed to detect short-term moves. Consequently, the only thing that should be inferred based on the buy signal is that the precious metals sector is likely to rally in the following days. Nothing more and nothing less – it does not tell us whether or not the rally will continue for more than just several days, nor does it tell us if gold stocks will move above their previous highs.

Summing up, combining the above information with other points made in this essay regarding gold, silver, and euro it seems that the whole precious metals sector is about to move at least a little higher (the risk/reward ratio being most favorable for gold), but the turnaround is just around the corner.

To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It's free and you may unsubscribe at any time.

Thank you for reading. Have a great and profitable week!

P. Radomski
Editor
Sunshine Profits

    Interested in increasing your profits in the PM sector? Want to know which stocks to buy? Would you like to improve your risk/reward ratio?

    Sunshine Profits provides professional support for precious metals Investors and Traders.

    Apart from weekly Premium Updates and quick Market Alerts, members of the Sunshine Profits’ Premium Service gain access to Charts, Tools and Key Principles sections. Click the following link to find out how many benefits this means to you. Naturally, you may browse the sample version and easily sing-up for a free trial to see if the Premium Service meets your expectations.

    All essays, research and information found above represent analyses and opinions of Mr. Radomski 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, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

    By reading Mr. Radomski's essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, 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.

Przemyslaw Radomski Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules