Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Who is Spreading the Virus? UK Coronavirus 2nd Wave Analysis - 30th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part II - 30th Sep 20
The Only Thing Systematic Is The Destruction Of America - 29th Sep 20
Fractional-Reserve Banking Is The Elephant In The Room - 29th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part I - 29th Sep 20
Stock Market Short-term Reversal - 29th Sep 20
How Trump co-opted the religious right and stacked the courts with conservatives - 29th Sep 20
Which RTX 3080 GPU to BUY and AVOID! Nvidia, Asus, MSI , Palit, Gigabyte, Zotac, MLCC vs POSCAPS - 29th Sep 20
Gold, Silver & HUI Stocks Big Pictures - 28th Sep 20
It’s Time to Dump Argentina’s Peso - 28th Sep 20
Gold Stocks Seasonal Plunge - 28th Sep 20
Why Did Precious Metals Get Clobbered Last Week? - 28th Sep 20
Is The Stock Market Dow Transportation Index Setting up a Topping Pattern? - 28th Sep 20
Gold Price Setting Up Just Like Before COVID-19 Breakdown – Get Ready! - 27th Sep 20
UK Coronavirus 2nd Wave SuperMarkets Panic Buying 2.0 Toilet Paper , Hand Sanitisers, Wipes... - 27th Sep 20
Gold, Dollar and Rates: A Correlated Story - 27th Sep 20
WARNING RTX 3080 AIB FLAWED Card's, Cheap Capacitor Arrays Prone to Failing Under Load! - 27th Sep 20
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelerting Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise

Commodities / Gold and Silver 2015 Jun 27, 2015 - 12:53 PM GMT

By: Michael_Noonan

Commodities

Last year, the rage was the record-setting number of coins various mints were selling to the public, such an incredible demand that would surely impact the demand factor for gold and silver. Then the focus changed to how many tones China and Russia were buying each and every month, scooping up all available supply with their insatiable demand. Gold and silver responded by going lower.

The most popular gold/silver sites, the most respected gold/silver analysts from around the world all chiming in how gold and silver will go through the roof while both metals continue to still languish in the basement, as it were.


Who has not heard $5,000 gold, $10,000, even $50,000 gold by an exuberant few? Same for silver, $200, $400, $1,000. During all this time, gold has yet to hold above $1,230, silver above $18. There is a huge gap between current prices and unfulfilled pie-in-the-sky price projections. This has caused much disappointment, even delusion by some because the sum of their purchases were often under water. Huge imagined profits actually became real [unrealized] losses. [This does not mean they cannot become profitable]

We wrote a little in-house commentary, last week, Adapting To Changing Markets,, to reflect how we have chosen a more focused approach to the short-term aspect of the markets, questioning the validity of the existence of free-trading markets, anymore.
The elite’s central bankers have virtually taken over almost all the Western world’s financial dealings and markets. A few, like crude oil, have become political tools.

The article is worth a read to understand the context of this commentary and how one should be in greater control of their financial destiny in these markets. The situation being what it is for the PMs crowd, there are three simple choices available. For those unhappy where the price for gold and silver are trading, sell, get out. Take a loss and move on and quit complaining. Life is too short, [unless you remain long gold and silver and have been awaiting a rally, then life has been long for the longs.]

You can hold what you have and remember the reasons for buying and accumulating either metal, or both. Attendant with the hold strategy is to keep on adding at these low prices, while recognizing that low can still go lower. The reasons for buying have not changed. In fact, they have gotten worse, and the ultimate outcome is a virtual guarantee that prices will go higher. What has been so difficult for most is the no guarantee as to when, and this gets into the context of our little commentary about adapting to market changes.

For the past few years, we have refrained from the long side of the PMs market, at least the paper portion. We have not hesitated to recommend buying and holding the physical metals for many cited reasons. As buyers, we are still long physical silver from as high as $47, and gold from as high as $1,800. Are we satisfied with our purchases? Definitely. Are we concerned/disappointed about some purchases at much higher prices? Not at all.

The reasons for buying were to protect against what seemed to be the shortening prospects of a collapsing fiat Federal Reserve “dollar” and the Western banking system. It is no different from buying home insurance to protect against fire/water/natural forces. Do you get upset when you look at your canceled checks and bemoan how you spent money on insurance and did not get to use it? Enough on the issue of holding PMs.

What everyone could benefit from is developing a set of rules for engaging in the markets. Why have rules? Rules put a market into a defined context. They serve as a guide to becoming successful in trading, and is that not the primary purpose for trading in the various markets? More importantly, having a defined and written set of rules will remove you from the emotional element of the markets few consider. Markets Are Neutral!

Almost all traders/stock participants develop some kind of emotional relationship with the markets. Many have a fear of them, cannot understand them, worry about what a market can do to them. “The market stopped me out.” “The market took my money.” “The market was rough on me, today.” You probably have your own similar kind of sentiment. All are wrong! It is the driving factor why rules are so necessary.

What is a market? It is a clearinghouse of information of the interaction between all buyers and sellers. All a market can do is generate information in the form of price and volume. That’s it! The markets are neutral, devoid of feeling. Does the market know or care what you buy/sell, when you buy/sell, and at what price? Absolutely not. You are the one that makes these determinations. They may result from the market information you see, but the decisions made are your own interpretations/perceptions and resulting beliefs about your expectations of what will develop, and that is where dysfunctional emotions get attached.

If you are experiencing fear of loss, disappointment in how the market is “behaving,” and the market is neutral, then from where are those feeling coming? From you! Any kind of emotional attachment is self-generating because the market is in control, you are not. The question is, why not?

What if you had a set of rules for participating in the market. Let us start with just one, a simple one: Rule 1: “I will only trade in the direction of the trend.” If the trend is down, my rule says I cannot buy. If gold and silver have been in a down trend, I cannot be a buyer, period. On that basis, one could not have traded in the futures for the past four years, and it is this reason why we have kept advocating not to be long futures. It does not get any simpler.

“This looks like a great buying opportunity.” “The market is oversold.” “It has to go higher from here,” etc, etc, etc. What is the trend? Down. Who cares if it looks like a great buy opportunity? Who cares if it is oversold? It does not have to go higher from a certain level. Ask how many thought gold and silver could not go lower three years ago, two years ago, a year ago, a month ago? Anyone buying had the weight of market momentum going against them and the greater likelihood of taking a loss. Was it the market’s fault for those making a bad decision to buy in a down trend?

Let us look at more complex issues but all based on the premise of the necessity of having a clearly defined set of rules.

How many have been saying the Fed’s fiat “dollar” is going to collapse, become worthless? Maybe the “dollar” will collapse and become worthless, but what do the charts say? The trend is obviously higher. The flip side of Rule 1 is, if the trend is up, I will not sell [short].

In recognition of the trend, our comments from two weeks ago, [1st and 2nd Chart] were to focus on how buyers were keeping sellers from pushing price lower and opening the door for a rally. We said the daily told a clearer “story.”

Markets are constantly testing and retesting support/resistance areas. With this knowledge, one can devise more rules that give rise to trade opportunities that are in harmony with the trend, [which vastly increases the odds of a successful trade].

On many occasions, we have mentioned how a market reacts to support or resistance will provide important information. Price retested a swing low from May. How did it respond? Volume remained relatively high, the close was near the high of the day, and this tells us buyers overwhelmed sellers at support setting up a buy opportunity.

Note that bar at support [arrow]. You will see this kind of pattern repeat in the markets over and over and over. All you need to is to develop a set of rules for how to enter into a trade under these market conditions: up trend, support tested and held, increased volume and a strong close. The probability for price to go higher under these and similar conditions is greater than not.

How do you think your trading results would be if you traded nothing but this kind of pattern set up with the trend? What you would quickly realize is that you would be in control, not the market. If the market does not show you this kind of pattern, you do not make a trade. What can the market do to you otherwise? Nothing. You have nothing to fear from the market because the market activity is not what you require.

Not every trade will necessarily result in a profit, but over a series of trades you will make money, guaranteed. But you must have a defined set of rules that captures these kinds of trading opportunities.

There also has to be rules for exiting. Trading multiple contracts, one can scale out of a position and lock in profits to reduce risk exposure. The reason for taking partial profits on the rally that followed the pattern buy signal came from a resistance area where we added a horizontal line that show where/why the rally stopped/paused. The last two small range bars show how the sellers are unable to push price lower, and the reaction, so far, has been weak. Weak reactions lead to higher prices. The trend favors higher prices. It is not a guarantee, but the odds of continuation are greater than not.

You always want the odds in your favor. How do you get the odds in your favor? Have a fixed set of rules to take advantage of market set ups, and there are so many kinds, and they all repeat over and over and over. We cannot say that enough, so we repeat.

Unusually large spikes in volume are generated by controlling interests, smart money, however you want to reference these monied participants. They are typically a transfer of positions from weak into strong hands. The public it too disparate to unify into a collective pack and move volume in a concerted effort, so it is always smart money doing the moving. Also, note where the volume spike occur…almost always at market tops/bottoms, swing highs/lows, important support/resistance areas.

This volume spike is near an important low, and more importantly, in this particular instance, it is occurring at the RHS [Right Hand Side] of a protracted TR. The farther price moves along the RHS of a TR, the closer it is to resolve [ending]. We may be getting an important clue here. Will the daily provide more detail?

There are several things going on here. First, let us acknowledge the potential for a set up that is very similar to that discussed in the fiat “dollar” chart, above. Prior week’s support is what we showed in the prior week’s chart. Another horizontal support line was added, [dashed line], to show how support is an area, sometimes layers and not just a single price, as many opt to use.

Price spiked lower, last Friday, retesting the March low and briefly going under the retest from late April, but note how price rallied strongly into the close on higher than average volume. Tuesday had a larger spike volume to the downside, but the close of Friday was higher than the close from Tuesday, and we infer from that that the Tuesday spike volume was strong hands buying, weak hands selling.

Everything needs to be confirmed, which means Friday’s bar where buyers overwhelmed sellers and took control needs to have a positive retest. It could be brief, subtle, and on occasion, not at all. One can never know, nor does one need to know. Just follow the established rules, and everything will work out.

Silver’s positively developing activity yielded a closer look at how gold was developing, and we took a more focused note that the TR since the end of March has been holding like a rock above the March retest swing low. The entire TR is a retest and one that is holding well, under the circumstances.

It is possible gold and silver are starting to see a change in sentiment.

Gold daily shows what we keep saying and something of which you should always be aware: markets are always testing and retesting, and in the process, these test can leave behind important clues. There was a retest of the recent low in May and a lower retest in June, but the June violation of the May swing low was brief. In fact, maybe you can recognize the character of the June retest. We did not label it as a retest pattern as was noted in the “dollar” and silver charts, but that is what it is. You can see how not all retests are exactly the same, but they respond similarly.

What makes gold’s retest from Friday of greater interest is the manner in which is was much more obvious in silver. Lastly, the spike in volume, arrow bar, ostensibly shows a strong rally and close on strong volume, collectively a positive statement. Sometimes, the volume can have the opposite effect where sellers have “hidden” in the rally but really took control from the buyers, and price moved lower, at leaf for a bit.

The net effect has been to show how one should always be reading the market from its perspective, based on the market’s activity and what message[s] it may be conveying. Then, armed with a set of rules, impose them on the market and decide not to engage unless and until your rules of activity are being respected, presenting you with an edge.

Trading is a business and needs to be treated like one where you are the center of every decision.

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.

© 2015 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

© 2005-2019 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