Best of the Week
Most Popular
1.US Dollar Crashes, Gold And Bitcoin Skyrocket As Economic Recovery Lie Is Exposed - Jeff_Berwick
2.Now Obama Warns Americans to ‘Be Prepared’ for Disaster… What Does He Know? - Jeff_Berwick
3.EU Referendum - Britain's Immigration / Migrant Crisis Explained - Nadeem_Walayat
4.EU Referendum - British People vs Establishment Elite, Vote LEAVE an Act of Defiance! - Nadeem_Walayat
5.Prominent Billionaire Investors Warn of Financial Crash, Quietly Position Themselves - MoneyMetals
6.Bankers Warn of BrExit Financial Armageddon if British People Vote for Freedom - Nadeem_Walayat
7.Bad U.S. Jobs Report Prompts Stocks Bear Market Rally Towards New All Time Highs! - Nadeem_Walayat
8.Gold And Silver – Friday May Have Marked A Pivotal Turnaround - Michael_Noonan
9.EU Referendum - British People vs Establishment Elite, the Illusion of Democracy and Freedom - Nadeem_Walayat
10.Felix Zulauf: Monetary Stimulation Creates Bubbles, Not Prosperity Nor Growth - GoldandLiberty
Free Silver
Last 7 days
Investors Map Post-Brexit Strategies Amid Global Market Upheaval - 26th June 16
Gold Price Weekly COT Update - 26th June 16
First the UK, then Scotland ... then Texas? - 26th June 16
Stocks Bear Market Resumes or Just More Noise - 26th June 16
Gold And Silver: Security, And BREXIT - 25th June 16
Dow, Euro & Brexit Recap - 25th June 16
Resistance Holding Gold Stocks after Brexit - 25th June 16
Venezuela vs. Ecuador (Chavismo vs. Chavismo Dollarized) - 25th June 16
Gold, Silver And PM Stocks Summer Doldrums Risk - 24th June 16
Here’s Why China “Economic Hard-Landing” Worries Are Overblown - 24th June 16
Jubilee Jolt: Markets Crash, Gold Skyrockets as Britain Takes Brexit - 24th June 16
BrExit Morning - New Dawn for Britain, Independence Day! - 24th June 16
LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - 24th June 16
Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - 24th June 16
EU Referendum Shock Results Putting BrExit LEAVE in the Lead Hitting Sterling Hard - 24th June 16
Final Opinion Poll Gives REMAIN 52% Lead, Bookmakers, Markets and Pollsters ALL Back REMAIN Win - 23rd June 16
Does BREXIT Matter? Outlook for Sterling - 23rd June 16
Keep Calm and Vote BrExit - Last Chance to Break Free of EU Superstate - 23rd June 16
Here’s the Foreign Policy Trump and Clinton Really Want - 23rd June 16
Details Behind Semiconductor Stocks Leadership - 23rd June 16
Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - 23rd June 16
BrExit Looks Set to Win EU Referendum, Final Opinion Polls Give LEAVE Lead Over REMAIN - 22nd June 16
Proof that the Gold Bears are Wrong - 22nd June 16
Here’s a Trillion-Dollar Investment Opportunity for Those Few with No Debt - 22nd June 16
BrExit to Save Europe from Climate Change Refugee Migration Apocalypse - 22nd June 16
Increase In U.S. Rig Count Will Not Cap Oil Prices - 22nd June 16
Are Copper and China Stocks Set to Rally? - 22nd June 16
SPX May Break Its Trendline - 22nd June 16
Believe it or Not: More Kids Live At Home Now than Since The Great Depression - 21st June 16
EU Referendum Latest Opinion Polls Show LEAVE Halting REMAINs Surge - 21st June 16
British Pound Outlook - BREXIT, Europe and You - Does your vote matter? - 21st June 16
Fascist Victory Behind the European Union - 21st June 16
EU Referendum Opinion Polls Analysis Shows Strong Momentum in REMAINs Favour - 21st June 16
Is It Time to Dump Gold and Buy Platinum? - 21st June 16
Could Central Bankers Be Gold and Silver's BIGGEST Allies? - 20th June 16
Words Still Mean Things – Brexit With Graham Mehl - 20th June 16
Baroness Warsi the Manchurian Candidate Quits LEAVE for REMAIN, Boris Johnson Next? - 20th June 16
FTSE Soars, Stock Markets Bounce on LEAVE Polls Surge, Bookmakers Widen BrExit Odds - 20th June 16
Brexit Would Trigger Devolution of Europe - 20th June 16
Stock Market Week Of Uncertainty - 20th June 16
Will Gold’s Bullish Price Chart Outperform Gold’s 5 Bearish Indicators? - 20th June 16
Bonds And Stocks At All-Time Highs: Are Markets Confused Or Broken? - 20th June 16
Silver Sleeping On the Job - 19th June 16
BrExit Odds Sink, REMAIN Polls Boost by Jo Cox Killing by Radical Right Extremist, Conspiracy? - 19th June 16
How Elliott Waves Tell You When to "Jump In" & When to "Jump Out" of Markets - 18th June 16
Stock Market Inflection Point During Bifurcation - 18th June 16
Gold And Silver – Insanity Is World “Norm.” Keep Stacking! - 18th June 16
Gold Stocks - Bull Markets that Follow Epic Bears - 18th June 16
The Fed Giveth and the Gold Bullion Banks Taketh Away… - 17th June 16
Brexit: "The Vote Heard Around the World" - 17th June 16
Gold Stocks Summer Breakout? - 17th June 16
Stock Investors Get Higher Returns and More Dividend Income - In Less Time With Less Risk - 17th June 16
How to Use the Gold-to-Silver Ratio? - 17th June 16
Inflation, Deflation & Associated Trading Prospects - 17th June 16
Overnight Markets Struggling to Stay Flat - 17th June 16
Gold Price Surges to Highest in Nearly Two Years On Central Bank and Brexit Haven Demand - 17th June 16
Stock Market Thinking Upside Down; Dow 18k Still Key - 17th June 16
Jo Cox MP Terror Attack Killing Claimed for "Britain First" - Witness Report - 17th June 16
Stock Market, Iron Ore, Bitcoin – Is Silver Next for Chinese Momentum Investors? - 16th June 16
EU Referendum Campaigning Suspended Following Shooting of MP Jo Cox, Suspect Named as Tommy Mair - 16th June 16
Why People are Migrating to the UK, Illegal Immigration, Housing Crisis Consequences - 16th June 16
Stocks Fluctuate Following Recent Decline - Bottom Or Just Pause Before Another Leg Down? - 16th June 16
The US Consumer-Driven Economy Has Hit a Brick Wall - 16th June 16
Bitcoin Price Going Parabolic Again, Now At $730 and Up 60%+ In Last Three Weeks - 16th June 16
China's Hard Landing Has Already Begun! - 16th June 16
Crude Oil Price - Oil Bears vs. Support Zone - 16th June 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Why 95% of Traders Fail

Gold And Silver - Market Says Decline Not Over. Silver More Pivotal Than Gold

Commodities / Gold and Silver 2013 Feb 24, 2013 - 01:21 PM GMT

By: Michael_Noonan

Commodities

Developing market activity is the best and most reliable source for market information. All you have to do is follow what the activity is saying, and you will have the clearest idea of where the market is headed. For the near term, of heightened concern for many, the market says the current decline is far from over. Price may not be far from the low of the decline, but the trend is down, and it takes time to turn a trend around, so do not expect to see a dramatic rise in the price of either gold or silver.

Our downside target of $1600 gold has been exceeded, while the $28 target for silver has not been met, although in horseshoes, it would be a leaner. [See Decline Not Over, 1st and 3rd charts, click on http://bit.ly/WWXFlt]. Next week, who knows?


The biggest advantage in letting the market speak loudest is that all one need do is follow its path, for it always leads to a logical conclusion. The conclusion may not fit with one's hopes or expectations, many times, but the market never misleads in its intent. It is not always easy to read, occasionally, so during those times, it is best to do nothing until a clearer direction becomes more discernible.

This week, the silver charts lead because we see them as more telling than gold. The monthly is our starting point. It will become apparent why silver warrants more focus when compared to gold as you view the respective charts.

We continue to mention the bullish spacing because it puts the metals into an important context from a larger perspective, and the spacing lets us know that silver and gold remain in uptrends with gold net stronger, but just not for the near term. A look at the monthly gold chart will make that perfectly clear.

This does not mean gold/silver will not still go lower. For now, developing market activity continues to point in that direction. Prices may be at or near a low, but we see no ending action that says one has been reached.

There is a very positive development in silver, even after last week's sharp decline. An important change in behavior occurred in August 2012 when silver rallied out of the doldrums for two strong months, "2" on the chart. What is somewhat impressive about the current decline is how it has been labored relative to the two month rally in mid-2012. After 4+ months, [it says 5* on the charts, the * signifying the 5th month is not over, and no one knows where it will end], that breakout area is still holding.

Compare the two strong rally bars with the 5 overlapping decline bars. They tells us sellers are expending a lot more effort to drive price down to the starting level where buyers took over last August.

It could be that February will continue to fall and go under the 26 level, we do not know. All we can do is look at what is known, to date, and draw some conclusions. Seeing more detail in the weekly and daily charts may help.

When you compare the weekly gold chart to silver, you will see how gold is weaker for the near term. We do not follow any fundamentals, but it could well be that the underlying supply/demand factors for silver, with its industrial use, are far more important than viewing silver as a poor man's gold substitute as a store of wealth. Similar usage demands do not exist for gold.

Price remains in a down channel, just it is slightly under, and it is also near the breakout level from August 2012, both concurrently offering potential support in this negative market.

An explanation is provided in the left corner of the chart concerning the dashed portion of the lines. They extend from 3 and 2, respectively, at the point in time just after swing high 3 is known. How price reacts to these lines provides important market information.

In the previous article, Decline Not Over, http://bit.ly/WWXFlt, also on the third chart we commented how price failed to reach the upper channel line, see arrows below, and maybe head back toward $28? This is how one pays attention to the market's message in order to avoid surprises or be on the wrong side.

One reason why we say silver may be at/near a low point is the climatic volume, three days ago, which also drove price under the lower channel oversold line. Markets often end in excess, and sharply higher volume always warrants attention for it almost always entails a transfer of risk from weak into strong hands. Smart money buys bottoms, and they show their hand by increased volume.

The volume from last Wednesday is mostly all short-covering. Net new buying usually comes in after a bottom is confirmed, and that is a caveat for acknowledging that price can still go lower, maybe not by much, but sill lower, to whatever degree. There has been no indication of confirmed ending action, yet.

The last two trading days have much smaller ranges and overlapping bars. The market is telling us there was zero downside follow-through after Wednesday, and overlapping bars reflect a balance between buyers and sellers at a point where sellers have been in total control. These are littler messages, and they need confirmation before acting on them.

It is interesting to note how price stopped just above the $28 support. Why? Why not just crush buyers even more, while sellers have so much control? The questions address what we implied above, are sellers still in total control?

For different reasons, as explained so may times before, buy physical silver, especially at these lower levels. As to futures, stay away from the long side. Picking bottoms is one of the surest ways of losing money. Better to just give your broker a big check and make at least one person happy. You also limit your "loss" to the size of the check.

The trend is down. Consistent money is not made trading against the trend. Period.

The monthly gold chart screams bull market! The bullish spacing is huge. As a reminder, bullish spacing exists when the current swing low remains above the last swing high, and we have drawn heavy lines for each. When smart money is so positive on a market, there is no waiting to see how the last swing high will be retested. The urgency to buy is so strong that a "space" is left behind, and it says how strong is the buyers' conviction to the long side.

Context is important. Price could break the $1520+ lows and gold would still be in a very strong uptrending market. It will simply take more time to overcome resistance from the $1900 highs established in September 2011.

An important point to keep in mind: the market does not care about your timetable. In fact, it does not even know what your expectations are. All it does is provide price and volume information. It is otherwise neutral. How you choose to respond to the flow of information is up to you. For now, it is telling everyone that it will be some time before an uptrend resumes.

Here is where you can see how gold is weaker relative to silver. We placed a box around the four-month activity that is acting as a buffer to the current price decline, in addition to the previous occasions when this level held, forming strong support.

This is our read of what the market is saying, right now. Focus on the last two weekly bars. The last one is just slightly smaller than the second one, but the volume was greater. The energy behind a price move is volume. When you see greater volume but with a bar that is smaller than the previous one, it is saying buyers were entering and meeting the effort of sellers. This is what prevented the range of the last bar from extending lower. It is a small "tell," as it were, but worth noting.

We think there are no accidents in the market, which is why we pointed to the wide range up bar from August. It began an important rally, and gold's decline just happened to stop at that level. Were gold to continue lower next week and erase that support, then that low would lose its potential significance. Everything must be confirmed by subsequent action.

Observing the second and third bars from the end, the high volume on the third bar shows buyers were present, based on the location of the close, off the lows. The second to last bar made a new low, just barely, but closed on the high of the range and above the previous day's close, telling us buyers won the battle that day. This is another indication of buyers overcoming effort of sellers at a point where sellers are supposed to be in total control.

This may not turn the tide yet, but there is some evidence that buyers are making a show not seen in the past several trading days. As to the last bar, it was lower on the day, but not very deep into the last two days' lows, and that says a weak effort from sellers.

Buy physical gold, without blinking. Stay away from the long side of futures. Only some unexpected surprise can turn these markets around on a dime, and anything can happen, but barring that, it takes time for a trend to turn, and without evidence that the lows for this down swing are confirmed, gold and silver have a lot of work to do.

By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2013 Copyright Michael Noonan - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Michael Noonan Archive

© 2005-2016 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

Catching a Falling Financial Knife