Volatile market movement in recent days seemed to have no effect on the long-term bullish push of gold and silver. The commodities show sharp fluctuation in 30-minute bursts as investors seek reliable signals, but prices remain stable on the close and the strategy of buying on the dips shows the most promise moving forward. Highs in gold hover around 1,555 and 36.50 for silver, and lows of 1,505 for gold and 34.50 for silver, while trading ranges remain low for both. For more on this continue reading the following article from The Street.
The following commentary comes from an independent investor or market observer as part of TheStreet’s guest contributor program, which is separate from the company’s news coverage.
Gold and silver trade have held their bullish overall trends, following a violent test of support that recently confirmed that the buy-the-dips pattern of trade on bullion is intact. The 4-hour trends are indicating that trade will favor further tests of support at main trend-lines at 1,505 and 34.50, before another major test of resistance.
The last 12 months of gold and silver trade have shown a strong tendency to find buyers at support. The potential for trade signals to form in the near term is weak, as a surreal period of trade movement is absorbed. Volatile periods of trade continue to hit the bullion markets in 30-minute explosions of price action that then consolidates.
Muted Headlines
News wires are quiet regarding bullion valuations, with little in the way of sustainable news chatter to instigate price action.
Where to Now?
- Gold generated a mid-term sell signal from 1,535 on June 23, which has not yet signaled to close
- Silver generated a mid-term sell signal from 35.70 on June 23, which has not yet signaled to close
- Both in a long-trend cycle overall that will not change to short until a weekly chart can close below 1,505 or 34.50
- Upside targets will include 1,555 on gold and 36.50 on silver
- Expect downside moves that hit 1,505 and 34.50 to reverse higher
- This is a technical and sentiment review that is signaling to buy gold bullion on any tests of support
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Bullion Correlations
Daily trading range is $16 on gold and 90 cents on silver, which are way below the historical norms and indicate that speculative interest is low on the selling days, and that the dips will likely continue to be bought. The 20-day Simple Moving Average on gold is at 1,535. The 100-day SMA on silver is at 36.80. Gold bullion has a 12-month 90% correlation to the euro (Eur/Usd) currency pair.
Previous Signals
Last three months of potential gold and silver bullion trade signals have generated eight trades, seven of which have completed, that covered 310 points of overall movement. Any misses have come on days that instant volatility hit the global markets in reaction to breaking news headlines. Most signals have been generated from 1-hour chart algorithms.
Alternate 24-Hour Trade
Investors who do not want to wait for their regional cash market to open, or do not have 24-hour access to the market they have open positions in, are able to access the 24-hour currency market. There is potential to analyze and trade currencies in a high-volume market that is supported by the global inter-bank system.
Investors can trade currencies in-line with a rising global market, or trade ahead of a falling cash market open. Being able to use currencies offers the opportunity to be in a trade before the regional market opens.
Traders could trade the currency pair AUD/USD in-line with the potential seen in bullion trade. Buying the US dollar and selling the Australian dollar on days of equity and bullion weakness is a simple process of placing a sell order on AUD/USD. The position can be managed in a similar way that equity-based trades would be bought and sold.
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Gold Bullion Technicals
Tracking the 50-day SMA at 1515 support, with a linear trend-line also at 1515.
ABC potential: A moved higher from 1450 to 1550. B leg lower to 1510 support. C leg has potential 1610 target.
Call to action: Wait for a weekly chart close above 1535, or buy the next reversal to 1505 area, repeating the same call from last week in a play that recently reversed and then broke higher. Strong buying activity was seen at 1490 on gold in April and May.
This swing point area has allowed a strong base to form that is unlikely to be seen again in quite a while, outside of margin manipulation issues at the exchanges.
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Silver Bullion Technicals
Trading in a tight 6-week sideways channel. The 100-day SMA at 36.80 resistance. Trend-line resistance is at 36.50, and trend-line support is at 35.00.
ABC potential: A leg formed long, with a move from 34.60 that targeted 36.50. B leg lower tested 35.00 support. Setting up a C leg higher that has a potential 37.50 target.
Call to action: Look to buy the downside tests of support at 35.00. No short trade until a weekly chart can close below 34.50. Strong buying activity was seen at 33.00 on silver in April and May. This swing point area has allowed a strong base to form that is unlikely to be seen again in quite a while, outside of margin manipulation issues at the exchanges.
GLD, SLV Outlook
The outlook for
GLD (GLD)
(148.50) and
SLV (SLV)
(34.50), the exchange traded funds that track gold and silver bullion momentum, is for consolidation above 147.50 and 33.50, and to struggle to easily break support. The ETFs are likely to continue to lag behind the main moves seen in bullion futures contract trade, as major price action is taking place ahead of the US session each day.
Strong buying activity was seen at 144.50 on GLD in April, and at 32.50 on SLV in March. These swing-point areas look to be solid price points that are unlikely to be easily broken.
Trade Desk Support
TheLFB trade desk generates trade signals that highlight specific price points from which to trade, and market alerts that highlight sentiment changes in global markets. TheLFB provides 24-hour market support for traders, investors and institutions. Service offerings include analysis of three asset class areas:
Foreign Exchange (Dollar Index, EUR, GBP, AUD, CHF, CAD, JPY)
Equity indices and ETFs (SPY, DIA, GLD, SLV, USO)
Commodities (Gold, Oil, and Silver)
This article was republished with permission from The Street.
