First my apologies for not updating here in a few weeks. Been extremely busy and just haven't had the time, haven't even really had time to do anything coin wise either.
Anyways, today was a big gap down for gold. Why? Who? What? I really dont know, don't care and really means nothing to me. Even if I ventured a guess as to "why" something does something, I wouldnt be able to make money money on it nor would I be right on the "why" part lol. I'll leave the "why" to talking heads. To me what guides me is the price action.
What I can say is the gap down today in gold and silver has been ugly and raises the possibilities for much lower prices. Lets turn to the charts for way to see what has happened.
As always, remember- charts dont tell us the future. They are only reference points, to give us clues as to what might happen. However, we always adhere to the immediate price action as that will always be right.
As I have been doing, I am keeping the charts super clean and easy to read and follow, just allowing price to paint the picture, we could talk moving/simple averages, bands, RSI, MACD, etc etc etc.. but again in the end, price will do what it wants to.
First up is a chart of our proxy SLV.
Notice the aqua arrow. Back in January it looked like Silver wanted to test its yearly lows. Instead of dipping lower, it reversed hard, pushing higher, with steady buying. On 2/14 it gapped higher and held the gap for two days, where it finally stopped moving higher.
So take a look at the upper aqua line and yellow line. We can see silver traded in a range, even fell back into the gap, but bounced several times. Eventually however, that gap was filled as silver went lower. Notice how many times, looking at the two green arrows, silver fell into the gap and finally broke into it.
From there silver broke through the gap and continued into a range. Today, we got a big gap down, and notice the red arrow to the far right. This is where we are at and are presented with several scenarios.
One scenario is a re-test of the January lows. The other is that is settles yet into another range before making its move. If the January low gives in, it raises the probability of even much lower prices in silver, perhaps even grinding its ways to testing its yearly lows. A test of the yearly lows would give in turn much lower silver prices.
Time will be needed to see which option we get. In either case tho, silver is not doing well, giving up its gains.
Now to gold, lets look at our proxy, GLD.
Gold had in January also been basing out, chopping around. It also broke out of the range, breaking higher, basing the aqua line, moving out higher. It then digested the move higher with a few weeks of chopping/basing action. Once again, it broke out higher, until it stopped, at the aqua line on the upper end. Two ranges developed here.
We can see after hitting that upper range, gold started moving lower, losing range one, going into range two, bouncing at the green arrow. Notice- the basing from back in January resulted in providing support for the decline, at least for a short time period.
So, once again, price has memory. Gold caught some of that support from back in January, ran up into the yellow line, and stopped. Why? Because again, price has memory. This time, the basing in price in February served as resistance, holding back price. For whatever reason, today, the sellers got out, rather than make any attempts to poke through and we got our morning gap down.
That brings us to todays gap down. Again we face some scenarios, and as always we need the element of time to clue us in. At this stage we could see another range develop, perhaps the January lows, when tested again, will serve as support.
The other scenario is we continue to drop- first through the lower aqua line, which are the January lows.
From there who knows, either gold makes some sort of choppy range or, if it gives up its January lows, then we can perhaps make the case for even lower lows in the price of gold.
There you have it, selling pressure is bringing silver and gold down. Do the yearly lows for both gold and silver loom next? Hard to say.... perhaps yes. OR we could just see more of this chop, ranges being formed that lead us no where.
One thing that is clear still is that gold and silver are not places right now to be investing it. There is just too much chopping around. It just isn't good to be place large chunks of money into an asset that 1- hasnt signaled that a floor is in 2- that shows any signs of wanting higher. We need more time.
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Posted 04/03/2014 02:32 am
