Best of the Week
Most Popular
1. Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - Nadeem_Walayat
2.Gold Price Forecast 2018 - February Update - Nadeem_Walayat
3.Bitcoin Crypto Currencies Crash 2018, Are We Near the Bottom? - Nadeem_Walayat
4.Trump Bubble Bursts, Stock Market Panic Dow 1175 Point Crash Analysis - Nadeem_Walayat
5.Gold Corrects, Bitcoin Markets Crash, Whilst Stocks Plunge - Nadeem_Walayat
6.US Treasury Bonds: Fuse to Light the Bonfire - Jim_Willie_CB
7.Dow Falls 666 Points As Cryptocurrencies Crash And Krugman Emerges From His Van - Jeff_Berwick
8.Stock Market Roller Coaster Crash Ride Down to Dow Forecast 23,000 - Nadeem_Walayat
9.Trading the Shadows - Oil, Dollar, Stocks, Gold Trend Analysis - B.R. Hollister
10.Stock Market Analysis: Baying for Blood - Abalgorithm
Last 7 days
Stock Market SPX Probable Pop-n-drop - 22nd Feb 18
Stocks Fail to Hold Gains, But Still No Correction - 22nd Feb 18
Why We Should Buy Essay - 22nd Feb 18
The Latest US Debt Blow - 22nd Feb 18
6 Tips For Seamless Business Foreign Exchange - 22nd Feb 18
How to Anticipate Stock Market Trend Changes - 21st Feb 18
Gold Miners’ Rally? What Rally? Watch Out for More Fake Moves! - 21st Feb 18
5 Big Drivers of Higher Inflation Rates Ahead - 21st Feb 18
Goofy Indictments Divert Attention from Criminal Abuses at the FBI and DOJ - 21st Feb 18
Bitcoin or British Pound ‘Pretty Much Failed’ As Currency? - 21st Feb 18
Stock Market Waiting for the Fed - 21st Feb 18
National Identity Demands Restrictive Immigration - 21st Feb 18
Best Opportunities for Freelance Technical Writing Jobs - 21st Feb 18
4% US 10-year Treasury Note Yield Will Be a Floor Not a Ceiling - 20th Feb 18
Governments Are LYING about Their Gold Activities while Mining Companies Cower - 20th Feb 18
No Silver Lining Here - 20th Feb 18
Semi Conductor Stocks SEMI Bearish? - 20th Feb 18
The Prisoner Promised Land - 20th Feb 18
Best Car Dash Cam Review: Z-Edge S3 Dual Dash Cam - UNBOXING (1) - 20th Feb 18
How Inflation Reduces The Real Value Of Social Security Net Of Medicare Premiums - 19th Feb 18
Could Stellar Lumens be a Challenger to Bitcoin for International Payments? - 19th Feb 18
US-China Trade War Escalates As Further Measures Are Taken - 19th Feb 18
How To Trade Gold Stocks with Momentum - 19th Feb 18
Is a New Gold Bull Market on the Horizon? - 19th Feb 18
Stock Market Decision Point! - 19th Feb 18
An Inflation Indicator to Watch, Part 1 - 18th Feb 18
Get on Top Of Debt Before It Gets on Top of You - 18th Feb 18
Will the Stock Market Make a Double Bottom? - 18th Feb 18
5 Reasons Why Commodities Are the Investment Place to be in 2018 - 18th Feb 18
1 Week Later, Stock, Bond Market Risk Remains ‘On’ as 2 of 3 Amigos Ride On - 17th Feb 18
Crude Oil Prices: A Case of Dueling Narratives? - 17th Feb 18
Free 1000 Youtube Subscribers Services - YTpals, Subpals, SubmeNow Test - 17th Feb 18
How to Trade as We Near March Stock Market Top - 16th Feb 18
Bitcoin as Poison - 16th Feb 18
GDX Gold ETF Weathers Stock Market Selloff - 16th Feb 18
Casino Statistics and Demographics - 16th Feb 18
IS Today Thee Stock Market Turn Day? - 16th Feb 18
Huge SMIGGLE Shopping HAUL, Pencil Cases, Drinks Bottles, Back Packs, Toys.... - 16th Feb 18
Tesla Cash Keeps Burning at $320 a Share - 15th Feb 18
Big Conflict Ahead in the Financial Markets - 15th Feb 18
Stocks Extend Rally Off Friday's Low, But Short-Term Exhaustion Near - 15th Feb 18
Stock Market Out on a Limb... - 15th Feb 18
Things Only a True Friend Would Say About Gold - 14th Feb 18
Global Debt Crisis II Cometh - 14th Feb 18
Understanding Crude Oil Behavior - 14th Feb 18
Stock Market is Getting Scary... - 14th Feb 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

Gold and Silver Price Ready To Go BOOM

Commodities / Gold and Silver 2014 Sep 08, 2014 - 05:13 AM GMT

By: Austin_Galt

Commodities

The wait for the next leg up in both gold and silver has been excruciating. Many bulls are losing hope and the number of bears appears to be increasing. As for me, I remain rock solid. I hold long silver positions and I must say I am not worried one iota. Of course I could be wrong. I seriously doubt it though. Let's see why.


There are really only a couple of things I wanted to show in this analysis. We will use the weekly chart for gold and the daily chart for silver. Let's begin with gold.

Gold Weekly Chart

We can see the triangle formation as made by the two black trend lines I have drawn. This structure is on the charts of most, if not all, technical analysts. And so it should be. But it is very obvious. And when something becomes too obvious, I put on my contrarian hat.

From previous analysis, readers will be well aware that I am looking for a rally that busts the upper trend line in a fake out move. I expect the break to only be temporary before it reverses back down to continue the down trend.

Also, in previous analysis, I stated I thought the lower trend line would hold this current pullback. Last week it broke through and in doing so provided further clarity. That is, I believe this is the start of a double fake out. This current break of the lower trend line is the minor fake out while the bust of the upper trend line will be the major fake out.

So, we have currently in progress the first fake out or false break of the lower trend line. To confirm this, we will need to see price reverse back up. However, there may be a touch lower to go to put in the pullback low.

I have added Fibonacci retracement levels of the recent upleg from the June low to July high. This has already been a deep retracement and the next support level is the 88.6% level which stands at US$1252. Perhaps we will see a move down to there early next week before the belated reversal higher begins.

I have added a Relative Strength Indicator (RSI) which also shows a similar triangle formation. I expect the next high in the gold price to be accompanied by a RSI reading that stays within the confines of this triangle pattern. At the very least, comes in lower than the previous high reading as shown at the July top.

As for the eventual top of the rally (after it finally commences of course!), I am still zeroing in on the 76.4% Fibonacci level which stands at US$1373. It may even get up close to the March 2014 high of US$1387 but I doubt it will surpass it. A top up there would also create a double top with the trend. That would be very bearish and would certainly suit my bearish outlook of gold then heading to sub US$1000 for the final low.

For those that still doubt we are about to see a major rally, let's just focus on the pattern of trading here. Note how from the June low, it took 6 weeks or 6 candles, including the low and high candles, to reach the July high. Since then, price has only retraced just over three quarters of that move but it has already taken 8 weeks and a new low next week will make it 9 weeks. This means price is showing more impulsiveness when it goes up than when it goes down. That generally means the trend is up. Keep in mind this is a bull trend within an overall bear trend.

Let's now look at silver.

Silver Daily Chart

I have drawn two black down trending lines. We can see price recently had a fake out to the upside before continuing downwards. This can be seen in the green highlighted circle. Price is now hovering just above the 88.6% Fibonacci level. I suspect price can dip down just below there early next week, perhaps down close to the lower trend line, before reversing higher.

The most interesting feature of this chart revolves around the RSI and, I must say, it has me captivated. That is the double bottom with the trend. This is essentially a triple bullish divergence as denoted by the numbers 1, 2 and 3. However, the last two lows have shown virtually identical RSI readings. This double bottom pattern generally leads to a powerful move higher.

Now keep in mind we are talking about the RSI and not price. What is interesting about the last few days trading is that price went marginally lower while the RSI did not. Price may still go lower yet without breaking the RSI double bottom.

In fact, in my opinion, early next week will see price trade lower on an intraday basis before staging a massive reversal higher. Price will go boom and so too will the RSI.

As far as I'm concerned, it's just a matter of time now. Tick tock.

By Austin Galt

www.thevoodooanalyst.com 

Austin Galt is The Voodoo Analyst. I have studied charts for over 20 years and am currently a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts, there seemed to be a dearth of technical analysts. My aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

My website is www.thevoodooanalyst.com 

© 2014 Copyright  The Voodoo Analyst - 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.


© 2005-2018 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