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Posted 11/10/2014 02:47 am
@Ceylon62
I know,, it is very sad. I feel very bad for everyone who has attempted to buy all the dips in silver and gold. I feel very bad for those who did not sell when they had gains. I feel bad for those who say they are in it for the long haul and then talk about a time period, like 20 years, where they will hold. Its just pretty tragic that a great uptrend was squandered. Unfortunately, holding for a long time period does NOT guarantee that the asset comes back, especially a commodity.
I am guessing a major part of the problem is the emotional attachment to silver and gold. As a trader, I have no attachment to ANY asset, doesn't matter if it is gold, the US dollar, AAPL stock, swiss francs, the Hong Kong stock exchange, or high yield bonds, as examples,and I could go on and on on everything I trade,,, if they have run their course in any direction I have been trading, whether it be up or down,,, I am DONE with it. I could care less what happens next to it.. if its done moving in a given trend I move on to the next thing.
I think the other factor that the public struggles in is this" oh gold and silver have been good to me, the price rose so high, it will be back eventually". Sadly, it doesn't work this way. You cannot have a feeling of any kind. If it made you a profit, good, sell it where you feel comfortable, book the profits and move on, nothing lasts forever in markets, after all, one invested in the PMs to see some sort of return and to cash in, not just see paper gains.
Markets are dynamic, pricing in the future and constantly changing. The goal is to move along with the market, not against it or predict what its going to do.
I agree 100% with your second point.. which I have been repeating many times: silver and gold are going to have a ton of overhead supply whenever they get out of their uptrend. As you are probably aware, this is NOT something that is just specific to gold and silver but ANY asset. We could be talking corn and it would also be there.
So yes, its going to take MASSIVE buying, non stop kind, to overcome these areas of resistance. I have RARELY seen this sort of price action where an asset overcomes the downtrend, and races back to yearly highs, two of which in the most recent time periods been aapl stock and the commodity, coffee. But even there, one can see that it took several and repeated attempts to get to yearly highs.
That is one reason and clue I am getting that gold and silver are not done with this downtrend,this same type of accumulation and buying is not present.
I will say again, dollar cost averaging in an declining asset, especially a commodity is the kiss of death. Averaging down rarely works, and when it is done, it must be taken into consideration what asset (stocks sometimes work in this manner but not always either) is it and what are the overall conditions it is being done in. Too many people come across smug and confident spouting "dollar cost averaging" as the solution to declining prices. Sorry but I have seen this thousands of times before,,even fellow traders and professionals do this and end up getting burned, they blow up their accounts... so what do you think are the chances of the public being successful at it? But again, its their money....
Well this is how I always approach any trade or observation of price, and this will explain how I am looking at silver and gold.
First and foremost, I personally never attempt to fix a price target to any asset, whether it is an uptrend or downtrend. The only thing I attempt to first establish is: do I have a trend? OR.. are we about to break a trend line and break out in one direction? One major reason I do this is to not allow any sort of bias enter my mind such as "X MUST go to 45" as an example. This frees my mind and allows me to move along with price, without hesitation in my mind about what it could, should do.
The other thing about price is this- on the way up, as say, 50 is broke, the movements speed up each time. Perhaps the next move moves to 55, and depending how much volume is there, maybe 60 is hit in a short time period. In other words, when an important area in price is broke, say a yearly low or high, the move accelerates, it feeds on itself.
So lets circle back to silver in this case. The way I am looking at it is this- 20 was broken, and usually I look for 5 point range... again depending on volume, trend, break of trendline or yearly low or high etc... from within that range, I take each point in price step by step.
So again,,, if we were in an uptrend and a stock hit 100... first range I would be looking for would be 110, with a first point hit at 105, and as the momentum picks up the buying increases. Again, I would be looking at each point, step by step. This also would be true in reverse. If I was selling short and the break was 100, I would be looking to see how far below 100 it would move ...first 95 on the end of the range and then... usually 90 or close to it..
Also take into consideration market conditions as well, which is why I dont like to say this asset is going to X. There is a fair amount of tape reading going on in real time.
So again, with silver, I was looking at it as, ok 20 holds or it doesn't, if 20 doesn't, then low range would be 15. Well, in due time we did get it, as we saw repeated consolidation patterns that got us to 15.
we hit 15 and thats where we stand, the other night it dipped to the lower end, think it was 15.04 and bounced since then.
I think, based on the patterns, if 15 doesn't hold, a range of 15 to 10 is on the table. I also think based on how gold and silver have been trading in this long term downtrend, its also possible that we see some pretty big counter trend moves which would be entirely normal. I also am prepared to see range bound trading and a lot of chop. It wouldnt be a shock to see some consolidation again before another move.
So as far getting to single digits, of that I am I wont entertain that thought until we have more price action to support that. However, we will be running into some areas of support soon and thats going to make it very interesting.
I will also say that if 15 is retested numerous times, its going to give it up to test lower teens.
Finally, because of how momentum works in price, how fast and swift moves are, I would not be shocked to see silver make a round trip here before it stops going lower.
So again, if 15 doesn't hold, lower teens would be my next range, if 10 didnt hold, then single digits are on tap and so on. Again, we need the element of time to tell us what the market wants to ultimately do with the price of silver. We need to pay attention to price as it hits each point.
I really dont want to see single digits out of concern for those have been stacking silver because it will be an emotionally devastating blow to them.
Keep up the good work Ceylon62, these forums need more people like you, technicals matter in the end and its how many of the worlds largest funds, commodity desks, prop desks, banks and other institutions decide to take positions, they do the heavy lifting so to speak and the market sorts it all out.
As always, keep an open mind to price and dont let others discourage you or mock you. Remember, nothing EVER changes in markets and those who choose who to willfully ignore price action are the ones who end up losing, sadly.
I know,, it is very sad. I feel very bad for everyone who has attempted to buy all the dips in silver and gold. I feel very bad for those who did not sell when they had gains. I feel bad for those who say they are in it for the long haul and then talk about a time period, like 20 years, where they will hold. Its just pretty tragic that a great uptrend was squandered. Unfortunately, holding for a long time period does NOT guarantee that the asset comes back, especially a commodity.
I am guessing a major part of the problem is the emotional attachment to silver and gold. As a trader, I have no attachment to ANY asset, doesn't matter if it is gold, the US dollar, AAPL stock, swiss francs, the Hong Kong stock exchange, or high yield bonds, as examples,and I could go on and on on everything I trade,,, if they have run their course in any direction I have been trading, whether it be up or down,,, I am DONE with it. I could care less what happens next to it.. if its done moving in a given trend I move on to the next thing.
I think the other factor that the public struggles in is this" oh gold and silver have been good to me, the price rose so high, it will be back eventually". Sadly, it doesn't work this way. You cannot have a feeling of any kind. If it made you a profit, good, sell it where you feel comfortable, book the profits and move on, nothing lasts forever in markets, after all, one invested in the PMs to see some sort of return and to cash in, not just see paper gains.
Markets are dynamic, pricing in the future and constantly changing. The goal is to move along with the market, not against it or predict what its going to do.
I agree 100% with your second point.. which I have been repeating many times: silver and gold are going to have a ton of overhead supply whenever they get out of their uptrend. As you are probably aware, this is NOT something that is just specific to gold and silver but ANY asset. We could be talking corn and it would also be there.
So yes, its going to take MASSIVE buying, non stop kind, to overcome these areas of resistance. I have RARELY seen this sort of price action where an asset overcomes the downtrend, and races back to yearly highs, two of which in the most recent time periods been aapl stock and the commodity, coffee. But even there, one can see that it took several and repeated attempts to get to yearly highs.
That is one reason and clue I am getting that gold and silver are not done with this downtrend,this same type of accumulation and buying is not present.
I will say again, dollar cost averaging in an declining asset, especially a commodity is the kiss of death. Averaging down rarely works, and when it is done, it must be taken into consideration what asset (stocks sometimes work in this manner but not always either) is it and what are the overall conditions it is being done in. Too many people come across smug and confident spouting "dollar cost averaging" as the solution to declining prices. Sorry but I have seen this thousands of times before,,even fellow traders and professionals do this and end up getting burned, they blow up their accounts... so what do you think are the chances of the public being successful at it? But again, its their money....
Well this is how I always approach any trade or observation of price, and this will explain how I am looking at silver and gold.
First and foremost, I personally never attempt to fix a price target to any asset, whether it is an uptrend or downtrend. The only thing I attempt to first establish is: do I have a trend? OR.. are we about to break a trend line and break out in one direction? One major reason I do this is to not allow any sort of bias enter my mind such as "X MUST go to 45" as an example. This frees my mind and allows me to move along with price, without hesitation in my mind about what it could, should do.
The other thing about price is this- on the way up, as say, 50 is broke, the movements speed up each time. Perhaps the next move moves to 55, and depending how much volume is there, maybe 60 is hit in a short time period. In other words, when an important area in price is broke, say a yearly low or high, the move accelerates, it feeds on itself.
So lets circle back to silver in this case. The way I am looking at it is this- 20 was broken, and usually I look for 5 point range... again depending on volume, trend, break of trendline or yearly low or high etc... from within that range, I take each point in price step by step.
So again,,, if we were in an uptrend and a stock hit 100... first range I would be looking for would be 110, with a first point hit at 105, and as the momentum picks up the buying increases. Again, I would be looking at each point, step by step. This also would be true in reverse. If I was selling short and the break was 100, I would be looking to see how far below 100 it would move ...first 95 on the end of the range and then... usually 90 or close to it..
Also take into consideration market conditions as well, which is why I dont like to say this asset is going to X. There is a fair amount of tape reading going on in real time.
So again, with silver, I was looking at it as, ok 20 holds or it doesn't, if 20 doesn't, then low range would be 15. Well, in due time we did get it, as we saw repeated consolidation patterns that got us to 15.
we hit 15 and thats where we stand, the other night it dipped to the lower end, think it was 15.04 and bounced since then.
I think, based on the patterns, if 15 doesn't hold, a range of 15 to 10 is on the table. I also think based on how gold and silver have been trading in this long term downtrend, its also possible that we see some pretty big counter trend moves which would be entirely normal. I also am prepared to see range bound trading and a lot of chop. It wouldnt be a shock to see some consolidation again before another move.
So as far getting to single digits, of that I am I wont entertain that thought until we have more price action to support that. However, we will be running into some areas of support soon and thats going to make it very interesting.
I will also say that if 15 is retested numerous times, its going to give it up to test lower teens.
Finally, because of how momentum works in price, how fast and swift moves are, I would not be shocked to see silver make a round trip here before it stops going lower.
So again, if 15 doesn't hold, lower teens would be my next range, if 10 didnt hold, then single digits are on tap and so on. Again, we need the element of time to tell us what the market wants to ultimately do with the price of silver. We need to pay attention to price as it hits each point.
I really dont want to see single digits out of concern for those have been stacking silver because it will be an emotionally devastating blow to them.
Keep up the good work Ceylon62, these forums need more people like you, technicals matter in the end and its how many of the worlds largest funds, commodity desks, prop desks, banks and other institutions decide to take positions, they do the heavy lifting so to speak and the market sorts it all out.
As always, keep an open mind to price and dont let others discourage you or mock you. Remember, nothing EVER changes in markets and those who choose who to willfully ignore price action are the ones who end up losing, sadly.
