by Bill Downey     Price Analysis of Gold and Silver
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Technical Analysis Trading Gold, Trading Silver/ analysis By Bill Downey providing key turning points & charts for investors and speculators in Precious Metals Trading, and Precious Metals Markets

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Bill Downey, of Gold Trends.net, LLC, is an Independent Investment Analyst with over twenty years of study. YOU SHOULD NOT TAKE ANY MATERIAL posted on this WEBSITE AS RECOMMENDATIONS TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED. Do your own due diligence. No one knows tomorrow's price or circumstance. The author intends to portray his thoughts and ideas on the subject which may s be used as a tool for the reader. GoldTrends does not accept responsibility for being incorrect in its speculations on market trend or key turning points that it may discuss since they are at best a calculated analysis based on historical price observations.

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  • 25 Feb 2012 9:44 PM | Bill Downey (Administrator)

    After a five month battle with the long term blue line, price finally broke above and rallied to the red 13 moving average line. The long term price is in the phase process of trying to increase the velocity and momentum back to the upside.  In order to re-capture the pace of the first half of 2011, price must re-enter the upper momentum channel.  That current price point is at the 38.20 area, where the lower momentum channel line and the 50% retracement point of the crash of 2011. 

    The weekly price chart below shows the previous four weeks, where price kept knocking up against that blue channel line. The breakthrough opens up the potential for price to now challenge that upper momentum line. The only strong resistance remaining is the Red 13 moving average near the 35.50 area. Wednesday is the last trade day of the month and we want to see a close above the long term blue line in order to solidify that area as becoming support. It would not be unusual for price to re-test the blue line on a pullback. However, since price just spent 4 weeks testing the underneath of that line, price could keep right on moving higher here. 

    Our longer term accumulation point in 2011 was at the 27.55 area, and we've just took a short term position at 34.55 on Friday. So far year to date, we've picked up over $5 dollars in short term trade profits over the first six weeks of the year.  The trend remains up.

    Silver Weekly Price Chart with long term channel and trend lines of price support and resistance

    Gold broke out to new highs last week and exceeded the key 1767 December price high.  The key now for gold is to take out the 1804 price area.  With this Wednesday the last day of the month, a close above 1767 would be another notch in the case that the correction for gold is over and new highs are coming. This current price area on the long term charts and channels is one of the two price points that could turn out to be high points for the year.  The Green channel lines have been providing support and resistance since 2009 and the December low was an exact hit of that lower trend line.

    The two most likely price points for a high in 2012 is the 1800-1868 area and the 2100-2200 area at the upper green channel line.  Thus, anyone looking to lighten up, or sell inventory or scrap, this is an excellent price point to consider.  The long term trends are all up, and this price point is one we need to pay attention to. If price can achieve a monthly close above 1868, the the upper line above 2000 will become the next target for a yearly high.

    Gold Weekly Price Chart with long term channel lines and price points to watch for 2012

    HUI GOLD STOCKS

    In an amazing display, the HUI Gold stocks index has held important price support area's. This area has held six different price attempts to sell off and last weeks action kept things alive one more time.  March is not usually a good time for gold stocks, but is it possible that the low we just saw a few weeks ago is going to turn into a contra seasonal move? With the HUI holding the key price support area's again, the short term trend looks higher. One of these times, these stocks are going to rocket higher and break above this long term congestion point. When it does, the rally should be a good one. 

    Hui Weekly Price Chart and long term channel lines of price support and resistance


    The US Dollar

    It looks like the major announcements that came from the Fed last month are doing its job. It now looks like a major reversal back down is in the early stages of development in regards to this latest wave. We don’t want to jump the gun, but the chart looks vulnerable. From a long term perspective, the chart below shows the US dollar bounce was just enough to qualify it as a long term wave. The dollar retraced at its highest point 23% of what it has lost over the last 10 years. 

    Unless the US Dollar turns around and rallies hard next week, the February close is in danger of closing below the December lows. There’s a final Gann angle line that has not been broken yet and the 34 week moving average still requires the dollar to close below the 76 level, but the chart suggests the dollar is on the ropes at the moment.



    US Dollar Monthly Price Chart with long term channel lines and Gann angles of price support







  • 23 Feb 2012 2:34 AM | Bill Downey (Administrator)

    Gold broke to new highs on Wednesday and is now that it exceeded the December highs, the next target price is the 1800 area.

    The chart below is the short term cycles we use to monitor the short term trends.  They are not exact dates, but they are enough to give us the advantage on what the expected stronger and weaker cycle portion of the month we are in.  The latest signal for a turn has so far played out and we've captured a nice move on the the trading signals page.  Gold buy signals from last Friday yielded good results.  The chart below helps us find the times MOST likely for a short term trend change.  The current move suggests any new highs next week will favor higher into early March.

    Gold daily price chart with short term cycle turning points for price


    The silver market did not make a new high on Wednesday, but is at the point where a breakout to higher levels is just above this price range.  A close above 34.80 will keep the upside in motion. With silver options expiration on Thursday, it will be interesting to see if the price starts moving up and catching up to the gold rally.

    Silver using ETF (SLV) moving average price trend

    This zoom in shows the action for 2012.  Gold has held the price points of support. Look at the buying that came in on each pullback at 1700. That is the new support area for the bulls.  As long as price is above that area, the current uptrend remains intact.

    The website is currently open and no login is required.  Feel free to  browse and check out the different pages we have.  Just avoid the login and click on any page on the menu.


    Gold 2012 Price Channel Chart with resistance area







  • 18 Feb 2012 2:33 AM | Bill Downey (Administrator)


    Everywhere I look on the long term charts, the markets are all at critical long term price area's and price points.  While we read many analyst's views, most of them are geared to the shorter and intermediate term time frames.  But to get a good grasp, looking at the long term charts twice a month gives you a great view from a far so as to better understand the close up view we're always seeing. 

    This weekend we start with the HUI GOLD STOCK INDEX.  This long term view shows that the HUI index has been in a major bull market.  However, over the last two years,  price has been in a massive trading range between 480-620. Right now, price is no higher than it was at the 2008 highs.  The long term channel and trend lines have supported price, but this recent long consolidation has price a a point where a major test of support is taking place.

     Note how the long term moving averages are arriving at the channel lines at the very same time price is.  The convergence of price, average, and trendlines is a major test of whether the HUI is going to maintain the momentum that has fueled this market for 10 years, or whether it is time for a pause in the bull market.  

    Hui Long Term Price chart with trend and channel lines and support and resistance points


    WHAT DOES IT ALL MEAN FOR AN INVESTOR ?

    Here’s a very important thing to ponder: What you do if you own GDX depends on your investment horizon.  If your LONG TERM ORIENTED---your strategy should always be “buy at the 34 month moving average.”  Since your long term investing, you don’t care about the squiggles on a daily or weekly and even monthly basis.

    THERE ARE ONLY TWO THINGS NEEDED FOR LONG TERM INVESTMENT SUCCESS.  The first is a stock that will survive the long term trends and regardless of what happens, it’s in a market sector that will never go away.  The second thing required to be successful can only be one thing---and that’s your buying strategy and the discipline to follow through.  And for the long term investor, the one timing element you need to consider is the 34 month moving average.  How important is the 34 month moving averages? It’s only be touched four or 5 times In the last 22 years in the stock market. Right now---the GOLD STOCKS are at the 34 month moving average.  

      There is only one thing that a long term investor must do in order to achieve success---and it is this.

    BUY LOW – SELL HIGH.

    Now before you throw your hands up in the air, shake your head and stop reading----just hear me out for a moment.

    You’ve probably said, (as everybody has) easier said than done.  Now that is true if we are a day trader, or a trader, or an options guy.  In fact, it is that way for every time frame---except one and that’s the long term.  Here’s why.

    If you’re a long term investor, you want to be buying only once or twice every 4 years. And the time you want to be buying is at the 34 month moving average. When you’re at the 34 month moving average, the buying you do is going to be pretty much at the lows. There are a few exceptions to watch for. The first is if YOUR NOT in a bull market and a black swan event occurs like in 2008.  And the second is to NOT BUY IT WHEN PRICE IS AT THE TOP OF THE CHANNEL.  You want to buy it when it’s at the bottom of the channel.

    It’s the same if you’re a long term investor in the stock market. The best buy in 22 years just took place last OCTOBER.  How can we say that when things are so bleak out there?  Aren’t we heading for a major depression and a crash of western society as we know it?  No, we’re not saying these things aren’t going to happen. What we are saying is that the 500 top companies (that’s the S&P500) might just be the ones that end up prospering to everyone else’s expense.  They may be the survivor’s of a great crash. Indeed, the beneficiaries perhaps.

    Spy Monthly Price Chart with long term channel lines and support and resistance price zones

    Now we'll go back to the chart we started with, the HUI Index.  The time to buy long term stocks is at the 34 month moving average.  For the first time in a long time you can buy the HUI  (and many other gold stocks) at the 34 month moving average.  If your a long term investor, this is the greatest timing tool in your box.  Its gets a signal every 3 to 4 years.

    It's as easy as starting an investment plan that puts away a weekly dollar figure and builds it up week after week until the HUI (or your favorite long term stock) touches the 34 month moving average. You then take the accumulated money and buy.  Then all you have to do is repeat the same thing over again.  You start saving each week until the next time it touches it.  If its in a month, you buy again.  If it takes 3 years, you wait and build up cash.  There is no simpler way to an easy long term strategy.

    But what about gold ?

    HUI Gold Stock Index Monthly Price Chart and most important price support an resistance

     

    Right now, the market marke is a long way from the 34 month moving average.  It currently sits at 1333 dollars per ounce. Can gold go that low?  Yes, on a liquidity squeeze,  it certainly could.  Regardless, its not if, its when.  And when it does, anyone who buys physical gold or for long term holding, should do so every time the 34 week moving average and price meet up.

     

    Gold Monthly Price chart with Long Term moving averages and price points to buy at

     

  • 17 Feb 2012 3:54 AM | Bill Downey (Administrator)

    Gold and the 2012 Uptrend

    The chart below reflects the price performance of gold year to date.  We’ve had four major probes of the 1700 area and each so far has held.  Thursday’s reversal back up has price testing the upper levels  of resistance for the week.  Gold  still needs to close above 1738-1742 to favor higher but the spike lows that gold held this week suggest that it is strong support at the moment.  The bulls seem to have drawn a line in the sand at 1700.  IF we close below the 1720 area on Friday, it will keep things in a neutral mode going into next week.  Watch that 1700 area.  That’s where the bulls are making their stand.
     
    Gold Price chart with 2012 channel line and support and resistance

    Silver and the Long Term Blue Line
    Throughout the entire silver bull market, the long term blue line has played a role in every major spike  in price that has occurred in the last 10 years.  At the moment, silver is testing this line once again.  With the 34 week moving average and the long term blue line converging here with price, it is the most important price point on the chart. 
    Silver has spent three weeks at this zone, trying to get above this line.  In order for silver to resume its upside momentum and accelerated price rise, silver is going to need to overcome the long term blue line, the 34 week average and re-enter into the momentum channel.  

    Silver weekly price chart with long term channel lines and suppport and resistance
  • 14 Feb 2012 1:18 AM | Bill Downey (Administrator)
    Gold Feb 14th

    So far a failure to re-establish new weekly highs above 1767 last week, keeps the short term pullback alive as we enter the new week. Price still needs to exit this tight price range to get it going and follow through on either direction.

    If price can’t close above 1738-1747, odds favor the cycle pullback remains in play this week and if 1695 gives way, look for 1676-1686 as the first support.

    As we move into Tuesday price is arriving at the critical area.  The 2012 channel line was broken today.  It’s not a big deal as it’s only a 6 week cycle, but it is the ‘first’ step to a momentum slow down.  Many times, price will move out of a channel and test the 23 or 38% Fibonacci retracement, and then gather its steam back up and return to a channel that is not as steep.  We’ve already tested the 1706 area, so the 23% retrace is complete  After a run like we’ve had, odds usually favor the 38% retrace.  A drop to that area or even the lower red channel line would fit in well with the short term cycles. The lower red channel line is also the spot where price would re-enter the “Bernanke” price range---where price really broke higher on that January announcement day.

    We could very well make a low on Tuesday morning and move higher into Thursday back to the resistance area.  In summary, the moving average trend is still up but a good sell off day would put us neutral if it develops.

    TURNING POINT on TUESDAY is either 1710-1715 spot or 1696-1704 spot for most likely low. On the upside, 1729-1738 is still the upside resistance to watch.  Tuesday could support a bounce if we hold this 1710-1715 area, but overall, we still favor the short term pullback is in play.  Any break lower on Tuesday favors 1695 first, then 1683 area.

    Gold Price chart with short term channel line and Fibonacci retracement price support zone

    The chart below defines the trading range. We spent the week going back and forth from the 1710-1750 area all week long.

    Thus as we enter Tuesday’s trade there, here are the important factors to watch for:

    On the upside, First resistance will be that lower dotted blue trend line and the 13 day average giving us a 1728-1736 (spot price) range. Any move above that area and the 1745-1751(spot price) area will come into play.  We favor the lower range to provide the resistance
    Gold has dropped out of the channel and that's usually a warning signal. For now, the trading range is still in play, and the price pattern is still of a look that we need to continue its respect until the 1695-1700 area is broken


    Gold 2012 price channel and support lines




  • 09 Feb 2012 11:45 PM | Bill Downey (Administrator)

    GOLD FEB 10 UPDATE

    GOLD---For Friday Feb 10Th

    Long Term=Up / Medium Term=Up / Intermediate Term=Up / Short Term =Down

    Recap and Overview
    As expected, the ‘control boyz’ (the big shorts in the market) once again did what they wanted to do with news and price.  In the end, the Greek debate status was in top form, as they announced an agreement just in time, but did not come to agreement on Greek pensions. The public translation is, we couldn’t come to agreement, but we’ll just say we did, and we’ll move to the next step in the process.  Besides, we’ll tell the public after the fact how much they lose.  Now is not the time as they are rioting in the streets. Thus the ‘control boyz’ took full advantage.

    For the third time they drove prices to our 1750-1767 resistance area. First they took price up to about an hour before London as that is their new intervention time as they try and change the AM/PM fixing trading results that has been going on over the internet.  Thus they took price down under 1730, and as the news started coming out, price ran up to 1752 as everyone piled on again in one hour. And again for the third day, they sold it off hard and all the new entries are now either out again, or the ones who have entered in the last three days,  and are still aboard, will not stay long if we break last week’s low. If we do, not only they, but a new group of longs will exit, and shorts will add to their position. 

    Coming into Friday, the short term cycle “window” closes after the day’s trading and unless we get another REVERSAL higher, prices coming into next week from a GoldTrends cycle perspective,the odds will favor the downside. In price, the stone wall 1755-1767 remains the price required to favor the upside. Otherwise, the odds favor lower on the short term.

    For the very short term and nimble traders, your strategy considerations can remain the same, consider shorting the weekly resistance area 1745-1755 in spot with stops above 1767 and consider profits near 1730 on ½ and breakeven on the remainder.   Since today was the 3rd rejection of this price, any break now of the lows of this week will favor 1650-1683.

    As far as the web site trades, I’m always trying to find a 1 to 4 week trend to get on and prefer not to day trade inside ranges.  That is just my personal preference.  I find that while, I make money, and it’s very easy to give it up just as fast.  My goal is to make money. Some months will be lean (last month in gold lean, but huge in silver).  The difference was I caught a good trend in silver and rode it.  In gold, I got stopped on my long from 1615 and it was a battle all month to find a set up that lasted after that. 

    Usually, I try and take 2 contracts on a position and sell one real quick 15 to 20 dollars higher and use that profit for my buffer on the other position in case price turns against the trade.

    Cycles are the only thing that has us alerted to the downside potential.  Gold and silver’s price has not turned down.
     
    Friday outlook

    Initial Resistance for 1740-1747 and 2nd tier 1754-1764
    Initial Support 1719-1726 and 2nd tier 1703-1711 and 3rd tier 1673-1683

    Last night’s resistance was listed at 1740-1747 and the high was 1752.  Support was listed at 1719-1726 and the low was 1729.

    As we discussed the last three days, a failure to reestablish new weekly highs above 1767 keeps the scenario the same as we saw at the November and December peaks.  Today’s failure is so far adds weight to the downside coming in to play. 
    Price still needs to exit this tight price range to get it going, but even that is increasingly favoring the downside.  With a reversal every day, we can’t say it won’t happen again either, but the odds diminish significantly on the 4th day for this to occur.  Depending on the outcome with Brussels and the Greek bondholders meeting might be the controlling factor again Friday.

    A close above that 1767 level, favors a test of the 1804.  If it can’t, odds favor the cycle pullback remains in play into next week and if 1700 gives way, look for 1640-1681. We’ll try and tighten the range once we see the pattern.

    Medium Term
    The situation on the long term daily chart shows this up and down motion right here is the battle of the trend lines. The bulls are trying to re-establish the 2011 uptrend line and neutralize this medium term correction.  The Green channel line is the break point where the bears would lose control.  We say that based on Gann Global and their extensive price data base. It shows a post high has never been exceeded without making a new high.  The fact that the Green trend line sits at the 1800 vicinity gives a lot of confidence that if it is exceeded, we should expect new all time highs in gold.  So we have our two price points.  1755-1767 and 1799-1822.  The first range has proven itself this week as the market recognizes that exact price range as a major price point.  This chart SHOWS us that if price breaks below the dotted uptrend line, there’s a lot of real estate before the next major support line.  Not only that, but look how the moving averages are arriving at the 2011 downtrend line at the 1640-1660 area. We’ve all seen how often price is pulled to channel lines when the moving averages arrive at them.  The bearish case gains credibility here after today’s drop. A WEEKLY CLOSE BELOW THE CHANNEL LINE PUTS THIS MARKET in trouble. A close below this week’s low and 1700 favors 1640-1681 as the next stop.


    Gold Daily longer term price chart with channel lines and support and resistance price points

     

    Intermediate Trend

    Moving Average Trend – Bullish since 159.90 – Current support (164.88-165.50)

    Swing Traders
    A close below 164.88 takes the trend out of bullish and goes to neutral undefined so it’s a consideration for an exit if your swing trading.

    The unbiased moving average trend remains bullish, but is at a key point.  In another display of how price is drawn to a moving average and trend line conjunction act as a magnet to price.  Thursday’s action did just that and price moved within one dollar of a perfect hit.   So now Thursday once again pulls back for yet another downside test.  The moving averages offer a second layer of support at 164.88-165.50.   A CLOSE BELOW 164.88 TAKES THE INTERMEDIATE TERM OUT OF BULLISH MODE and into neutral.  This would be yet another indication that this rally is losing steam and has the potential for a sell off.  Price needs to close above 171 to give the slightest relief and a close above 173.50-174 get above resistance.  In summary, the trend is still up, but the intermediate term is being challenged. 
     
    Gold ETF GLD Price chart with moving average trend indicator and channel and trend line price zones


    Short Term
    The Blue Dominant cycle “window” closes after Friday’s trade.  Thus as soon as we move out of this range, the real trend should be under way.  We’ve had three fakes, and avoided them, this next one favors it will be the real move.   Here to the 1767 area comes in play as any close above 1767-1775 would be a new HIGH beyond the cycle boundary established and would favor a higher move for 1 to 2 weeks.  If that happens, 1804 is the last resistance before 1900.
    On the downside, a break below last week’s low would favor 1640-1680.  If we haven’t entered by then, we will look to hop on.

    Gold Daily Price Chart with Short Term Cycle Turning points and trend lines 
    What Next?
    With a Fibonacci 23 up days, a pullback of 5, 8, or 13 days should be in play.  Regardless, the trading range is the yellow zone.  Note how we are right at the 13 day average at 1728 and the 2012 Channel’s lower line is at the 1715-1720 area.  The 34 and 50 day are right the 1660-1670 area and there’s a Gann red line there.  The edge of the trading range is 1695-1705.  We enter Friday with price at support, and still without a “SELL” signal from a price standpoint. Today’s price bar was also a bearish bar. Still it leaves us going into Friday, inside the trading range, above the channel line, and above at the 13 day.  Most indications favor the downside.  What we need to see is price break lower now.

    Friday can go either way, it’s the last day of the cycle window, or it’s prep for the weekend. EVERYONE else knows what we know, and the question is whether the market is getting ready to fake again to the upside?  When we weigh the evidence, price favors lower---but price has not broken down.  From a swing trader or position trader standpoint, one would want to see a close below 1700 to get bearish.  From a smaller trader standpoint, it is pure agony going short that far down into the move.  A consideration strategy is to go short by splitting the trade into three contracts.  If you trade the 100 oz, use three 33 ounce contracts, or if you trade the mini, use three 10 ounce contracts.

    Odds and the weight of the evidence favors lower. Price needs to confirm. I will post my own trade update at midnight New York Time.  The 2 am time period has been where the ‘control boyz’ have been working.  That’s about an hour before London opens.

    Bottom Line
    The trend is up but most indicators favor lower.  All indicators can favor lower, but price is the only one that matters.  From a trader standpoint, the play consideration is to use 3 smaller contracts, and short the on the way up to 1750 as a consideration. If you’re a bull and you favor that the shakeout we saw this week, is to get everyone off before we go higher, then the consideration is to play it the opposite way. One consideration would be buying here and then two more small contracts between here and 1700 with your stop below that.
     
    Friday favors a nervous day for gold and a lot of uncertainty is abound in all the players.  They have shaken the early entry longs three times this week.  The best way to convey Friday is that the odds favor the downside, but the “trend” is still up and hasn’t buckled---and price is right in the middle of the trading range. A move below the 13 day at say 1725 adds pressure, dropping below the trend line at 1710-1715 adds more and a drop below 1700 puts the short term downtrend in full gear. The weight has to favor lower on Friday. Any move above 1757-1767 will be another reversal.  With the long weekend here, and a dizzied trade, any news out of Europe or bad economic reports out of New York will add more confusion as it will negate all the good numbers we saw last week.  Even good news now will have traders thinking NO QE3.  It’s not going to be an easy next few weeks.  Favor lower---but as this week has shown, be ready for anything.


    Gold Daily Price Chart with support and resistance

  • 08 Feb 2012 2:09 AM | Bill Downey (Administrator)

    Gold and silver are testing key price area's on Wednesday.  As to whether the corrections in the metals are over, here's a few price charts to consider.  First up is the silver price chart using the Silver ETF (SLV). 

    Note how the price pattern from the 2008 liquidity crash had 6 basic price points and lasted just about 34 weeks.   We see the same pattern set up this time and the same time frame  (within a week). 

    So is the correction over?

    Odds favor that the price lows are in. During this entire bull market, silver makes a spike high, and then the first major down leg is usually where the price lows are made. That's the good news.  The not so good news is that it usually takes an additional six months to consolidate and trade in a price range before silver gears up for the next big move.  We think that's still to come,  but we should at least expect a trading range for a while.  The upper end looks to be either 35.50-36.50 or 38.50-39.90 over the next couple of months. 

    Silver using ETF SLV weekly price chart 2008 crash vs 2011 price pattern and time length

    In the gold market, the situation is that price is at a major channel line.  The key to the upside is the 1767 and 1804 area.  December has 1767 as the high point and the November 1804 price print is the post high since the peak.  If we close above 1767, it will most likely trigger a test of 1804.  According to Gann Global's extensive database, gold has exceeded a post high point and then made a new low without making a new high first.  Keep those two prices in mind---1767---to keep this week moving up, and 1804 as the ultimate test for the bears.  Look for a peak this week at 1755-1765 or 1799-1812.  Those are the two favored area's.

    Gold weekly Price chart with long term channel lines and price support and resistance points

    The Stock market has everyone calling that the downtrend line (dotted) has been exceeded. While that is correct,  the real key will be the upper resistance line.  The trend remains up, but the Wedge pattern will have to be watched carefully.

     

    Stock Market - SPY ETF (S&P500) Price chart with key trend and channel line support and resistance

     

     

     

  • 05 Feb 2012 1:28 AM | Bill Downey (Administrator)

    In order for this market to turn BULLISH at this point in time it must continue HIGHER FROM here for another two weeks and make a high at the NEXT RED cycle point. In other words, a double inversion. A single inversion (which we just saw,  happens about 20-25% of the time. A double inversion happens about 8 to 10% of the time.  If price does that, it would take out 1804 (Nov high) and would have the odds 99% in favor of new highs.  The cycle "window" is open this coming week. Ideal day is Feb. 7th (plus or minus 72 hours) If the cycle plays out, then we will see a pullback into the 21st of the month.

    When the market is in a bull trend, the lows are made on the dominant blue cycle and the highs are made at the red cycles.  When corrections are in play, the highs are made on the blue dominant cycle and the lows on the red. Had we pulled back into this time frame, the cycles would have been set up to signal an end to the correction.

    Gold Daily Price Chart with Short Term Cycle Turns

     

    The important thing to take away is that silver is inside the 2011 range and is challenging the long term blue line. The 2011 dotted downtrend line is just above the blue line near the 36 area.  This dotted line is next if NFP gives good news in the morning. That would provide the spike that would test the 2011 dotted downtrend line. There is an even more interesting line white line above the 2011 dotted that is the bottom of the old momentum channel. If silver breaks thru the 2011 downtrend line, a test of that white channel line would be in play. The odds continue to favor the upside, but silver must deliver here at these channel lines.

    Silver Daily Price Chart with Channel Lines of Support and Resistance zones

     

    Medium Term---Neutral
    GDX touched the lower channel line at the 49.22 three week's ago and has pushed up to the 58 area where a dotted downtrend line is offering resistance. 

    The choppy and overlapping price pattern has had over a year to forge new price territory but stubbornly remains inside a large trading range.  This type of pattern is not conducive condusive to a bull market. At least not until the pattern completes. Not always, but if the gold stocks are to move higher as a group, this type of pattern will have to go away. The most likely scenario for the pattern look is an Elliot complex correction labeled below. IF price cannot break above the dotted trend line where price is nudging against, then the pattern will be open for one final push down into the 48 area. 

    Key resistance for the coming week is the 58-59 area. The 34 week moving average (not shown) is at 57.22 and this weeks close remains below it.  Price needs to close above that dotted trend line to continue the upside.  Any drop back into the breakline zone will leave the potential for the pattern below to remain in force. The good news is that once the final wave is in, the pattern favors a higher price resolve as you'll see on the next chart.

    GDX Gold Stock Index Daily Price Chart with Elliot Wave Count

  • 02 Feb 2012 11:45 AM | Bill Downey (Administrator)

    Gold has reached our first resistance area for the week at 1755-1765 and has a chance of being the high for today and maybe the week. The rally is on its 23rd day and a pullback is due in this area.  The December high for the month was 1767 and the shorts are trying to stop to rally in this area.  However, gold has maintained a very strong price pattern.  As you can see by the chart, gold is trying to establish price points that will hold the current support line that it is encountering. Gold usually has a pullback from Thursday into Friday morning during weeks that have the NFP payroll data.  Thus,  the trend remains up, but a pullback into Friday could develop. If gold cannot get above 1767, a pullback to the 1744 area will be first support.

    Gold Price Chart with Channel lines and support and resistance zones

     

    Silver

    Silver is also at resistance at the 34.00-34.50 area and is the first weekly target of expectations.  Additional Resistance is the 35.03-35.50 area.  The tremendous 20% gain in January has brought new life to the silver market on a short term basis. A pullback is due and the first support area is that dotted blue Gann line below price and the yellowed out area at 32.20-32.60 area.  As long as we hold that area, the trend remains up on the short term.  Price has been at this 34 area all week and remains the key area for silver to overcome. 

    Silver Price chart with support and resistance Gann lines

     

    HUI Gold Stocks index

    Gold stocks have held the key support area of 480-500 all through 2011 and so far in 2012. As long as price holds this area, the trend will remain neutral.  Any break of 480 would suggest the gold stocks have more work to do on the downside. The trend is neutral.  February usually produces a short term peak during mid month, and a pullback into March ensues.  It takes a close below 480 on the HUI to turn the trend down.

    Hui Gold Stocks Daily Price chart with Support and resistance

     

     

     

  • 29 Jan 2012 3:30 PM | Bill Downey (Administrator)

    Gold
    The Gold Market continues to hold the Green momentum channel that was developed using the last liquidity crisis of 2008. From that price low, we constructed a "momentum" channel that has provided the velocity, slope and major support lines for the gold market. Even the upper channel line provided a major price peak resistance line. The most important point of that line is that it was DRAWN BEFORE the price highs, not after. And how about the Middle channel line. Price has only been above it once---or two months during the final blow off rally point.

    Is gold ready to re-enter that upper portion of the channel? The attempt is arriving now. For the upcoming week, the 1755-1775 area is the first point to watch. If price closes above the 1767 price area, it will have taken out the December high. That will be right up where that middle green channel line. Should PRICE CLOSE ABOVE the MIDDLE GREEN LINE on a monthly basis above 1804, odds will favor that the correction of 2011 is complete and a new up leg should be under way.

    Gold Monthly Price Chart with Trend Channels

     

    Silver
    The long term silver chart show us us the most important market point in the silver bull market. The long term blue line was the point that provided the HIGH PRICE RESISTANCE on every spike in this bull market. When it exceeded it in 2010, was the EXACT place that the acceleration took place in price. The crash of 2011 had the first leg support on this line during May and June. Then the September crash broke it and took price to 26. Look at how many times silver has come back to test this line. EVERY MONTH it comes back and tries to get above this line. ONCE price closes above this area on a monthly basis, this line will become LONG TERM SUPPORT and the bull market will have new legs.

    But what about all that talk about 200 and 500 dollar silver?

    If the bulls are correct about this, then price will re-enter the UPPER MOMENTUM CHANNEL. It's as simple as that. Only that type of SLOPE UP will support a move to these high levels. If we're going to triple digits -- there is no way that price will not enter that channel. And on this long term basis, there is only one line remaining that must be overcome to go test that momentum channel again. And that's the Long Term Blue line. Price is once again about to try and get above it. Join us on the silver button as we track the long term bull market. (check out the trading history for silver last year on our web site)

    Silver Monthly Price Chart With Long Term Channel and price support lines

     

    HUI Gold Stock Index
    The HUI gold index has been in a massive choppy and overlapping pattern all year. But when we take a long term look at the Gold Stocks, they show a 1000% gain from the 2000 low at 50. When taken in that context, maybe its the gold stocks that has been waiting for gold to catch up. In either event, as long as price continues to hold that base it has formed at 500, the long term trend is up. Once we bust thru the 650 area, odd will favor that the gold stocks will double over the next few years. The 34 month average has arrived at the bull/bear zone of support. IF this test is successful, which we favor it will, then the gold stocks will soon be joining the party again. After a year of consolidation, the market is "sober" as the froth has been wriggled out of it. We're not in a new up trend yet, and the past has shown that its going to take patience. PRICE NEEDS TO GET BACK ABOVE THOSE UPPER white lines and the 650 area. Until then, the medium term trend is NEUTRAL and the BULL MARKET has not yet resumed in this area.

    Hui Gold Bugs Index Monthly Price Chart With Long Term Channels and Support Lines

     

    US Stock Market
    The USA stock market is at a long term major resistance point. The exact low of 2011 was right where the long term up trend line and the 34 MONTH MOVING AVERAGE came in line to form a major low at 1072. Now we arrive at the most important point of 2012. We have a Cross road line junction and the LOWER bottom line OF THE 2009 WHITE MOMENTUM channel. Thus we have three ling term lines and PRICE STUFFED right underneath the "Triple Underpass."

    The chart message is clear.  A monthly close above these lines and the doom and gloom market bears are going to have to come up with a lot more explanations so they will stick to the one that is CORRECT---artificial stimulus and FED action. What about those who portend a crash is at hand? The long term chart says this is the last resistance until the 1460-1520 area in the S&P500 INDEX. That's 1000-2000 dow points higher then here. So if the bears are going to be right, they will have to be right near this area and price will have to react here. Otherwise, this market has the potential to move much higher on this long term chart. IF WE CLEAR THIS AREA,  FAVOR overall higher prices into the 20th of February---the week of President's day holiday and maybe the Easter time frame. Let's see what it does here. (Gann Overlay -- from Gunner24

    Spy (S&P 500 ETF) Monthly Price Chart with Long Term Channels lines of Support and resistance

     

    US Dollar Long Term Chart
    The Zoom in of the long term dollar chart shows that THE DOLLAR is on the VERGE of another major price failure due to the recent action of the FED. This market was ready to break higher after a 10 year bear market. Look how December price closed right ON THE CHANNEL LINE (you can't see the closing bar) And now the JANUARY BAR is about to close below the channel line as it has dropped over 240 pips here at the end of the month. Look how the 34 MONTH BULLISH BLUE AVERAGE HAS TURNED BACK DOWN and the read average is back above the blue. IF WE CLOSE THE MONTH below the BLUE MOVING AVERAGE, it becomes a RED FLAG for the long term trend as it will suggest that the DOLLAR is making it's cycle high for the year and will FAVOR another drop into the lower 70's again.

    It will take an all out LIQUIDITY PANIC coming out of Europe to take the dollar up any further from here. That is not beyond the realm by any means. We should have a good inkling next week if the revised "print till you drop" plan has enough speed to keep up with the global de-leverage that is going on. Watch that 34 month BLUE line as the key spot at the 78.77 area --- The red line is at 79.39 area. A monthly close below the blue line keeps the potential peak in play.

    US Dollar Monthly Price Chart with long term support and resistance channels

    EURO

    For the last few weeks we've posted on the Euro and the potential for a rally. We discussed that the EURO, instead of collapsing, could turn into a placebo for the German D-MARK. In other words, If the insolvent nations were to leave the Euro, it would not cripple it, rather it would increase its significance. We've also been highlighting a weekly chart of the Euro with a MAJOR HEAD AND SHOULD BOTTOM pattern. We've left the chart on the page under this chart.

    Finally, we've been discussing how the US Dollar has a high level correlation with January seasonal peaks. The chart below is the zoom in of the action for the last two weeks. The move has been strong and sharp. THE $1.25 area is the NEW SUPPORT BOTTOM FOR THE MARKET. The short term might be a bit extended here, but the point is that we don't necessarily want to write off the Euro. Can it go to par like some noted analysts suggest? Yes it could---but if that happens, THE USA exports to Europe will CLIMB 25% and will further damage an already shaky USA economy. Europe on the other hand does not want a higher Euro for the same reason the US doesn't, as they need to sell goods also. And this is the crux of the Currency Wars. There just isn't enough private consumption to further economies and the only way out of the debt problem is to have a vibrant economy.

    Euro Hourly Price Chart Rally from the January lows with short term channel lines

     

    For the technician's out there, how about this for a major bottom Head and Shoulder inverted formation? The results on the chart above certainly has been on a tear since Jan 16th.

    Euro Weekly Price Chart with Support and Resistance Channel lines

     

    Buttonwood Turn Dates
    The group is working on refining many aspects and is also studying if there are longer term signals that can be extracted from the data they use. Buttonwood dates usually emit a trend change---or an acceleration in price. As in all timing indicators---there is no holy grail.

    Want to receive Buttonwood email? Send request with Buttonwood Subscribe in subject line to info@goldtrends.net.

    Printed 36 hours before the correction low---the GLD chart shows a Weekly/LT Cluster Buster turn date---and it was right at the correction low so far in gold.

    GLD Daily Chart With Cycle Turns

     


Technical Analysis :: Gold & Silver

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