Fellow Risk Takers and Speculators,
NFP #s came out stronger than expected and cause a downward move in Silver and Gold . Price action caught support at the 61.8% fib retracement level of the previous swing from $15.49 to $18.45. What is key here is that this downward price move was mainly driven through the market (COMEX Gold and Silver ). My speculation is that the physical market will find strong bids here and will unwind some of the driven price drop.
From a technical basis:
1. | We have clear indication that the upsloping channel has caught much for the price action moves, the green circles drawn on the chart show the number of times the channel slope has caught the price action and price finds support or resistance at those points. In the recent move down, we see that price has caught support at the channel floor drawn in with a thick blue up-sloping . I'm looking for prices to stay above this level.
2. Fibonacci Ratios | The 61.8% fib retracement level from the recent swing found support at $16.619 as shown on the chart. This again, acts as support and I'm looking for prices to stay above this level.
3. Fibonacci Extensions or | If prices do stay above the support levels indicated by the two points above, we can use a or price movement to forecast possible take profit targets. The first target I'm looking at is based on the 61.8% extension of the major swing from $14 to $18.45. The completion of would mark my second target at $21.
Looking for a high reward-to-risk trade here and going for bullseye!
Stop Loss: 16.49
All the best
Previous support along the blue trendline seems to be acting as resistance now.
This is an ominous sign and if price cannot break back above the blue trendline, we should be expecting a move downwards. My stop loss has been moved to entry as of 14 Feb and will continue to leave it there.
Note how Silver is showing strength and that Gold is lagging behind Silver. This is the opposite of what happened throughout August to November 2014 where Silver lagged behind Gold, taking larger price moves downward.
My speculation is that the Gold/Silver ratio might be unwinding a little with Silver showing relative strength over Gold.
I would choose to buy into strength than to buy into weakness. For me, the LONG silver trade exhibits better probabilities in the near term than the LONG gold trade given the price moves seen over the past week.
Update - 13 Feb 1:13am (GMT + 8)
The market's reaction to the slew of poor US news releases earlier was small. It seems that investors are getting used to the constant misses in economic data. I had expected Gold and Silver to hold its gains after news but it seems that the market is still uncertain.
From a technical basis:
We had a bounce off the downsloping red trendline AND the 61.8 fib level retracement at $16.62 which coincided with our entry point of the trade. We need to see price stay above the blue upsloping trendline. If that trendline becomes resistance, it indicates a move DOWNWARD which would stop us out.
If we look at the Gold Daily chart, it had bounced off an RSI: 40 support level, which similarly it needs to stay above to maintain a bullish outlook.
For more conservative traders, you can choose to set your stop loss to entry and re-enter the market once bullish signals have been confirmed and we break past the $17.1 level again.
Here is a speculative Andrew's Pitchfork that I am watching. This fork is not validated yet but seems to catch some of the price action. Will watch for more to determine if it captures the slope, support and resistance of the price action.
Also, note the 1.618 extension of a smaller AB=CD extension providing resistance. This level, $17.09, needs to be taken out to open up an accelerated upside move.
If not, it would be prudent to close partial position in profit.