I noted on my blogs in early July that gold (here) and silver (here) were technically bullish from a trend perspective – but overbought from a momentum perspective. You will also note on those blogs that the ratio of smart money selling (commercial hedgers) vs. dumb money buying (retail investors) was skewed towards net “smart” redemptions and “dumb” purchases of the metals. This is a contrarian signal that should be taken seriously if momentum is overbought on weekly charts. Further, I noted on the blogs that both metals were approaching their respective resistance targets. Given the factors just noted, I didn’t feel it likely they would breach those prices until an overbought pullback occurred.
Two obvious questions need to be answered if we want to trade gold or silver. Where to buy, and where the next targets lie.
The near termed chart for gold shows us a pullback target in the $1290- $1315 area. I will look at buying at that price. Current resistance targets – not seen on the short termed chart below – are my prior-noted $1400 area and then $1600. If gold can break $1400 it has less noise to get through on its way to $1600.
The slightly longer chart for silver shows a pretty obvious support pullback target of $18. I will consider buying at that price. Silver has an equally clear overhead resistance target at $22. Buying near $18 and selling near $22 would be a nice trade by itself. Whether silver could make it through $22 is yet to be seen.
I’m on vacation this week, and won’t be posting a new blog until I get back August 15th
Thanks again for your work in updating us Keith. Do you have any timeframes associated with your targets? For example, for the last 4 yrs, gold has closed the month of Aug higher than it opened. So I’m thinking the pullback in gold will be this month with a turnaround prior to month end.
I’ve also noticed some wild swings in natural gas lately. Would you consider doing an article on that for any upcoming opportunities or trends to look out for?
Thanks much and enjoy your vacation!!
Fred –I will cover Nat gas again shortly
As far as time frames–the only time measurements I use are seasonal–otherwise, I mostly look at price and hope that price is hit sooner rather than later!
I am in sync with you on the gold trade. it looks like an entry point will happen in the next little while!