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A Change In Trend For Gold And Silver?

By Patrick MontesDeOcaCommoditiesJul 05, 2014 09:15AM ET
www.investing.com/analysis/a-change-in-trend-for-gold-and-silver-218431
A Change In Trend For Gold And Silver?
By Patrick MontesDeOca   |  Jul 05, 2014 09:15AM ET
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For the third week in a row the price of Gold and Silver managed to close above its 50 day MA respectively. This very is strong confirmation the weekly trend has turned up from neutral for the precious metals markets.

Echoing my comments recently, “The gold market rejected the low of $1250 that coincided with the 9-day MA, and found good buying support on high volume. A very good indication that we have some new players back on the long side for silver and gold, increasing the probability that the $19 levels for silver and $1240 for gold are fundamentally supported by technical and fundamental reasons.”

With gold and silver dropping to the levels of support mentioned in our last report published in Seeking Alpha, they found the technical and fundamental support needed to complete a major long-term bottom on June 3, 2014. This is approximately the mid-point to the 180/360-degree cycle that created the high in the middle of March and projects an extension of time and acceleration in price towards the middle of September of this year.

The test of the June 3 low confirmed the latest swing trade bottom and advanced to the corresponding swing trading targets and weekly resistance levels of 1316 for gold and 20.79 for silver as documented in previous reports.

I also said, “Short-term, intermediate and long-term traders/investors should use this final window of opportunity to trade short term and accumulate to build a long-term bullish position as current prices trade around the $1,240 range and are truly in a historic environment when fortunes can be made in a relatively short period of time. The next 2 to 3 years will go down on the books as such a period of time in history for the yellow metal and current prices will be a thing of the past.”

In a weekly report published for the Equity Management Academy last week, I made the following comments for the gold and silver markets:

“Cover short on corrections at the 1312 – 1309 levels and go long on a weekly reversal stop. If long, use the 1309 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1323 – 1.331 levels during the week.”

“Cover short on corrections at the 20.67 – 20.44 levels and go long on a weekly reversal stop. If long, use the 20.44 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 21.17 – 21.43 levels during the week.”

As we can see all swing targets have been completed and accomplished for both metals last week.

Gold and silver corroborated expectations for a June-September advance documented since December 22, 2014 by spiking to new lows in the month of June and testing critical long-term support. Rejecting the lows made on June 3, then surging to make an outside monthly close reversal it confirms a 2-3 month advance. This scenario fits perfectly with previous analysis we’ve documented and published in Seeking Alpha.

For a more detailed technical picture, let’s take a look at the weekly gold and silver markets and see if we can identify trading/investing opportunities for next week.

GOLD

The June gold futures contract closed at 1320. The market closing above the 50 day MA (1299) is confirmation that the weekly trend momentum is bullish. A close below the 50 day MA would negate the weekly bullish short-term trend to neutral.

With the market closing below the VC Weekly Price Momentum Indicator of 1322, it confirms that the price momentum is bearish. A close above the VC Weekly, it would negate the bearish signal to neutral.

Cover short on corrections at the 1308-1300 levels and go long on a weekly reversal stop. If long, use the 1300 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1333 – 1.347 levels during the week.

Gold Weekly Chart
Gold Weekly Chart

SILVER

The July Silver futures contract closed at 21.17. The market closing above the 50 day MA (20.74) is confirmation that the weekly trend momentum is bullish. A close below the 50 day MA would negate the weekly bullish short-term trend to neutral.

With the market closing above the VC Weekly Price Momentum Indicator of 20.94, it confirms that the price momentum is bullish. A close below the VC Weekly, it would negate the bullish signal to neutral.

Cover short on corrections at the 20.88 – 20.58 levels and go long on a weekly reversal stop. If long, use the 20.58 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 21.40-21.62 levels during the week.

Silver Weekly Chart
Silver Weekly Chart

Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.

TRADING DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

A Change In Trend For Gold And Silver?
 
A Change In Trend For Gold And Silver?

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