Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver Analysis - Bull Trap in Gold?

Commodities / Gold & Silver Dec 22, 2007 - 09:22 PM GMT

By: Joe_Nicholson

Commodities Best Financial Markets Analysis Article“If the triangle is going to prove correct, the question becomes whether the e wave low is in place or is another small low to come. Either scenario would be bullish for gold as it would make imminent the start of a 5th wave move to new highs, which a move back above the 5-week sma at $800 would tend to confirm. An alternate that keeps the recent selling corrective … looks for a lower low in the $750-775 range. The question from a fundamental standpoint will be whether the forces causing this consolidation in metals will persist enough to take gold to it's lower target, or strengthen enough to take the bullish shine off silver and metals altogether.” ~Precious Points: More Tough Love from Bernanke and Co. December 15, 2007


Precious metals had a positive close to the week, but did not ultimately make any final determinations between the possibilities traced here over recent weeks. For some time we've been calling the consolidation in gold corrective and ultimately bullish, but the chart in silver is far less optimistic. Strength in the dollar threatens to erase the recent gains in the precious metals, but a breakout in platinum could portend a bullish resolution to the current consolidation in the others.

When gold peaked in late October, the original expectation was for a three wave move to the $750-$765. First discussed here in early November, this scenario remains valid and is shown in black in the chart below. In December, however, the relatively shallow correction opened the possibility of an even more bullish fourth wave triangle consolidation, which seems to have become the consensus view.

As the chart shows, the lows early last week hit at the 5-day simple moving average mentioned here as a crucial support line and a proxy for the lower trend line of the unfolding triangle. The rally from there stalled but finally moved above the 5-week sma, appearing to corroborate the e of a fourth wave triangle count as mentioned in the last update. However, the move from a triangle e should be a powerful thrust that breaks out of the triangle. Though Friday's action began strongly, it stalled in the afternoon leaving the wxy alternate still valid.

We'll know very soon which count is invalidated as time for the triangle is rapidly disappearing, but both scenarios in the chart above are ultimately bullish for gold, calling for a new high in early '08. Remember the bearish count for gold monitored in the fall had a c wave low well under $700 and, while this is currently just an outside chance, it will again be watched closely if gold loses the $750 level. It will take an impulsive thrust above $823 next week in the front month futures contract to rule out the triangle fake out. If gold cannot break out of the triangle next week, the triangle will likely be invalidated, suggesting a more complex correction and would require further examination.

Silver also had a strong week, moving back above $14, but failed to win back all of last week's losses. Friday's rally failed to take out the previous day's high and closed back below the 50-day sma. The white metal continues to paint an ugly picture and weighs on metals as it continues to look as though it will need to test support in the $13.50 area. If gold fails to break upward by the end of the year, this retest is almost a certainty, whereas well established resistance awaits any move higher.

As mentioned, the recent action in platinum contradicts the message in the silver chart, and may point to the most bullish scenarios for gold and silver. This is certainly not a foregone conclusion, however, as the impulse in platinum could now be finished and rollover. With a major cycle in the dollar set to turn bullish in January, the week ahead will be crucial for determining the near term outlook in precious metals.

by Joe Nicholson (oroborean)

www.tradingthecharts.com

This update is provided as general information and is not an investment recommendation. TTC accepts no liability whatsoever for any losses resulting from action taken based on the contents of its charts,, commentaries, or price data. Securities and commodities markets involve inherent risk and not all positions are suitable for each individual.  Check with your licensed financial advisor or broker prior to taking any action.

Joe Nicholson Archive

© 2005-2022 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