No matter what the latest “news” development is for PMs that paints a rosy picture, those in the fundamentalist camp are looking through rose-colored glasses to expect change in the near future. The charts continue to tell a more accurate story that belie all known|fundamentals, and the charts shown here depict a market in decline with no apparent end in sight.
The above are edited excerpts from the original article* by Michael Noonan (edgetraderplus.com) entitled Gold And Silver – Charts Tell The Story. Decline Not Over.
[The following is presented by Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample here – register here). The excerpts may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Noonan goes on to say in further edited excerpts:
However important underlying fundamentals are, in terms of supply vs. demand, they have been, and continue to be, of little to no use in determining when reality will re-enter the market. When that happens, price will adjust and reflect the true picture of gold and silver’s record (demand) accumulation.
All that matters for now is the political situation involving the moneychangers and their puppet government regimes giving them cover during the end game of their world-wide theft. Just last Thursday, we saw once again another “smash-down” in gold futures. At one of the best possible times to assure liquidity and excellent execution, 1,500 contracts were sold around 5:30 a.m., CST. Who needs to worry about getting good fills when the only objective is to intentionally move the market lower?
Gold – Monthly Chart
The monthly chart below is presented to show how the last three months have had overlapping bars. This means there is a greater battle between buyers and sellers at a level where sellers should be in total control.
Contrast the last three bars with the two preceding, and the other two rally bars show less overlap, indicating greater EUM, (Ease of Upward Movement). The ranges of the two rally bars are also larger than the last three decline bars which supports the conclusions made.
It takes more time and greater effort to turn a monthly trend than a weekly or a daily one. While there is no evidence of a turn in trend, the fact that price is hugging the upper down channel line is more positive. In a down market, one would expect to see price hugging the lower channel line.
Gold – Weekly Chart
The weekly chart below shows a slightly different picture with price nearer the lower channel line. We can infer price is closer to a potential support area, and volume increased in the process. The significance of the increase in volume is addressed on the daily chart below, and again on the silver weekly/daily charts below.
Gold – Daily Chart
The daily chart below is a more complicated read, yet revealing about that 1,500 contract sale, seen on the third bar from the end with a sharp volume increase. One would expect a big “win” for the bears, with all that unopposed selling, yet the location of the close, mid-range the bar, tells us buyers were equally present, keeping price from closing lower.
It is the…[ last] two trading days that make the read more complicated. [On] Thursday the 2nd bar from the end only went marginally lower than Wednesday’s low and closed higher than the opening. Volume was much higher than average, of late, so buyers were again present, keeping price from extending lower. Friday’s activity is the coin toss.
After two days of showing some presence, buyers could not take advantage and rally price higher. At the same time, sellers could not take advantage of the trend momentum and press price lower. This makes Friday an inside day, and the range was small. From small ranges, a form of market balance, we can expect imbalance to follow. Note the small bar, 4th from the end. It led to a wide-range imbalance sell-off the next day.
The advantage of reading developing market activity, as we are doing, is you do not have to know in advance in which direction price will move. Instead, we assess the situation and prepare accordingly, following the market is it moves directionally.
This analysis is all about the paper futures market, and there is no reason to be on the long side. As to the physical, continued buying is always recommended, especially at these low levels. The reason for buying is to own and hold the physical in opposition to the central banker’s worthless fiat issue, as the most effective means of preservation/protection of one’s capital.
Silver – Monthly Chart
As seen below, the monthly chart on silver is holding better than gold by virtue of the last three bars contained in the range of the 4th bar. Gold’s 4th bar has already been exceeded, downside. The message is one of effort vs. result. The 4th bar shows EUM, and the next three down bars are labored, by comparison.
Price is staying closer to the upper channel line, (resistance), and not reacting away from it and all the activity is occurring at an axis line that acts as support in one area, then becomes resistance, or vice versa, as here. The trend has not ended, but it is showing potential for change as much for continuation.
Volume is the market’s energy indicator. The greater the volume, especially at an area of support, (and resistance, as well), the greater one needs to pay attention. It is “smart money” that creates volume and moves markets. It is the public that responds, almost always at the wrong time, (selling lows, buying highs).
If smart money wants to move a market lower, it sells, (creating greater volume) at higher price levels, in anticipation of buying in at lower levels. Look at the high volume low in June. Weak hands were selling, sell stops being triggered, while smart money was on the other side, buying. Then note the high volume at the swing high at the end of August, the reverse effect.
Silver – Weekly Chart
Will the same hold true for this past week? We do not know. Volume was not as great, but we do not need to know, in advance. If a swing low develops, there will be evidence of one on the lower time frames that may afford a low-risk entry. That, in turn, depends on ones’ trading style. The point is to see how it is the market that provides the most reliable information.
Silver – Daily Chart
The daily chart below appears as the weakest in position of the three time frames. It is closer to a potential turnaround, or ready to head for new lows.
The increase in volume on Wednesday, and slightly higher on Thursday, tells a similar potential story as the daily gold chart. It is always best to let the market show its hand, and then follow. Examples of that were given on the weekly chart with the June low and August high. These signs work on all time frames.
Buyers, or Stackers, should continue unabated. Those looking to trade paper futures have no reason to buy. We have not been advocates of the short side because we do not like the company and refuse to be a party to their efforts.
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
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