According to the charts, the price of silver is not ready to reverse its trend. [In fact,] the monthly chart, and the lower time frames, clearly indicate the trend as down….The probability is high (80%) that the last swing low (in June) to $18 will be exceeded… To what degree is unknown. It could be a failed probe, or it could take price a few dollars lower. Because this is a politically driven war against the precious metals, no one has a clue how much lower and how much longer the elites can maintain its increasingly fragile control.
So says Michael Noonan (tradersedgeplus.com) in paraphrased excerpts from his original article* entitled Silver – A Rigged Market Coming To An End.
[The following is presented by Lorimer Wilson, editor of www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample 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:
The Merit of Using Charts
The use of charts has its detractors, many simply from an inability to understand them, some from misapplying them, and a few from saying the charts are not real because they reflect the paper market, which is rigged. [The latter may indeed be] true but, paper valued or not, even the price for the physical is dictated by the paper market – at least for now. Until that changes, it is the only game in town. For anyone not overly used to looking at charts, they do convey a certain degree of logic, and the message can, at times, be incredibly helpful.
A chart reflects the directional momentum of price behavior exhibited by participants. It is a way of tracking the results of all bets being placed, and it is the best way to see how the most skilled and informed, what we call smart money that moves markets, operate. Smart money trades with prevailing price direction, called the trend. They buy low and sell high, axiomatically, so it pays to have an idea of what they are doing.
A monthly chart provides the overall history and context of a market, and it is closely followed by smart money. Most traders/investors do not even look at monthly charts. We look for any existing synergy between the various time frames, for it tells a more compelling “story” about what is likely to happen. To the degree any synergy may be apparent, the greater the degree of logic one can glean from the charts.
According to the charts, the price of silver is not ready to reverse its trend. The monthly chart, and the lower time frames, clearly indicate the trend as down. Knowledge of the trend is the most important piece of information one can have, as a starting point.
Monthly Chart[As can be seen in the monthly chart below] there is a small amount of spacing when the August swing high failed to reach the 2011-2012 swing lows. This tells us that sellers were confident enough that price was headed lower, that there was no need to wait and see how broken support would be retested. Whenever spacing exists, the probability is high that the last swing low will be exceeded. That swing low was $18 this past June. Those odds are in the 80% area, right now. To what degree the swing low will be exceeded is unknown. It could be a failed probe, or it could take price a few dollars lower. Because this is a politically driven war against the precious metals, no one has a clue how much lower and how much longer the elites can maintain its increasingly fragile control.
With $18 having been a previous area of support, from 2008, and again in 2009-2010, the ability for sellers to move the market lower will be met with increasing buying support. For now, that spacing is indicative of silver having its work cut out to change the trend, and trends can take time to change. The one exception would be a surprise event that moves the market unexpectedly, creating a V-bottom, with price accelerating off the lows.
The labeling on the weekly chart below supports what was expressed on the monthly. The focus will be on explaining the numbers. When we say there is a high degree of logic in reading developing market activity, the more detailed weekly chart serves as a great example.
At 1, you see a wide range vertical decline bar. This is telling us that sellers just took over in a big way, evidenced by the EDM [Ease of Downward Movement].
At 2 here was a reaction rally where price stopped at a half-way retracement. A horizontal line can be drawn from that swing high, extended into the future. We made it a dashed line to indicate it was drawn as of that swing high date, and how the market developed from that point on was
after that fact.
At 3, we can expect resistance, based upon the logic that price just failed at that level in October/November 2011. A failed probe to the upside develops, right at where price failed at 2, confirming the importance resistance just under $36.
At 4, eight months later, there is another failed rally, respecting the horizontal line drawn almost a year earlier. Three failures at the $36 level are a good clue that price is more than likely to head lower. From 4, down to support at $26, you see a series of lower swing highs and lows, indicating a weak market.
At some point in the future, a rally to 5 will become pertinent. Once support was broken at $26, and with ease, that level will become future resistance.
There is a small change of behavior, when price rallies quickly for four weeks in August, where the last swing high was formed. That failure is what created the bearish spacing. The decline since has been relatively labored, telling us buyers are more active and not allowing sellers to move the market lower with ease. Still, the odds of the June low at $18 to be broken remain high.
This is the message from the market that tells us about the participants and the degree of control sellers have over buyers. Sellers remain in charge, despite all of the bullish news and indicators there are about strong demand for and a shortage of silver. All of that bullish news has been priced into the market. In other words, it is going to take something new to move the market to the upside.
Our scenario is not a definitive explanation for silver, but it goes to show the kind of thinking one needs to better understand why precious metals are going lower and not higher. One of the strongest moving factors to act as a catalyst for silver will be the fate of the fiat dollar. That is all central bankers care about.
China’s and India’s record buying aren’t even enough to change the trend. Let that be your message of how strong a hold central bankers can exert in suppressing price. Why would China or India want to see silver at $25, $30, $50, or over $100 when they can buy at current levels? Take a page from their book and keep on buying.
Just as history does not directly repeat but often rhymes, so, too, does the market. People make history. The markets are composed of people, as well, and this is why one sees repeating pattern behavior. The daily chart below picks up where the failed August rally created the spacing on the weekly chart.
You see the rhyming pattern on the daily repeating like the weekly above.
The reason why 1 starts where is does is due to the gap lower, next day, and the last small rally just before price broke sharply was at point 2. 3 and 4 are similar to explanation given above, so no need to repeat. The chart says it all. At some point, a rally will meet up with 5.
We see the same broken support, just like the weekly, only the last swing high retest, 2 bars ago, Tuesday, [this is written Thursday evening, the 12th], it did not leave any spacing behind. However, Thursday’s wide range decline on increased volume erased the Tuesday rally which had even stronger volume. This is an indication of how rallies cannot be sustained and a sign of a still weak market.
Finally, there is no answer for when a change will occur, and there have been a great many silver experts that have used bullish signs as justification for calling for much higher prices, but that has not materialized. Listen to what the market is saying, and not what others are saying about the market. It may be weeks, it may be months, it may even be longer before the manipulators lose control, and they will, as history tells us. History also tells us it often lasts longer than most people expect.
Buy the physical while you can, even if it takes another year before reality prevails. Just as one cannot know when a turn will occur, one cannot also know for how long silver will be able to be purchased, in the interim. Be smart. Better a year early than a day too late.
[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.]
Other Recent Noonan Articles:
The decline is holding near the last swing low. Will the June low hold? The odds are greater for the low not holding, based on the trend, but there is no way to determine the probability of the June low giving way, for it is possible it will not. Read More »
The dramatic rise in Bitcoin is the best reminder for all those buying and holding physical gold and silver, for whatever length of time and at whatever price, better days are assured. It is just a matter of time. Read More »
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 for gold & silver 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. Read More »
Fundamentals are relative, charts are absolute. They accurately reflect all that is going on, regardless of reasoning/motivation and…right now, the charts are letting us know that higher PM prices are unlikely to occur anytime soon. Barring some kind of “overnight surprise” that will shock the markets, odds favor lower prices over higher prices unless and until demand shows up in chart activity. Read More »
It takes time to turn a market around, and silver is in that process. There is no degree of certainty that a bottom has been reached, but there exist at least a probability the recent lows may hold. Whether the lows hold or not, one cannot lose sight of why accumulating silver has been so important. When price finally accelerates higher, the trying of one’s patience will quickly be forgotten and all will be well. Read More »
Some of the finest and most highly regarded minds in the world of PMs have been saying gold and silver are going higher…[but] the charts have “said” otherwise, and that has been the correct read…The fundamentals may be as bullish as can be [but] the charts are sending a different message. Read More »
The manipulated raids in the gold market since last April may be hurting the Precious Metals game players, weakening their confidence and “disproving” gold’s worth against a fiat currency, but they serve a greater purpose, as in Federal Reserve payback time to China. Here’s why. Read More »
The Ponzi bubble is bigger than most can imagine. Western central planners… [continue to try to] suppress gold and silver in order to keep their sorry lives alive. In the process, the destruction of people’s financial well- being is unabated… Read More »
Using past history of how price responds, it is likely that gold, and silver, could move sideways for another year or two. While this flies in the face of so many current, supposedly “expert”, opinions [mine is not based on opinion but, rather, is strictly based on the facts as conveyed by the charts. Take a look and you will see that too!] Read More »
Below is a perfect example of how the charts timed the movement in the price of gold and silver over the past week. Yes, you CAN time the market as this article clearly demonstrates! When the market “talks,” we listen.] Read More »