Zentrader started out in July 08′ as a way for me to share my nightly research, provide trade ideas, and keep a trading journal that kept me accountable and systematic in my trading. This experience has been good to me as I have built invaluable long-standing relationships. It’s also been therapeutic for me by helping me organize my thoughts, and I’m finding the longer I trade the markets, the more ways I need to detach myself emotionally and relax my mind as the internet’s ability to deliver endless information can be a blessing and a curse to a trader. I believe that to have longevity with investing, one must find ways to calm the mind and trade from a detached point of view. -- Jeff Pierce
Up until today I was open to the idea that Gold has bottomed but if we don`t find support on near the daily RSI on gold then I think we`re heading back to the lows. It`s too early to make that conclusion as Gold will at least have an attempt to take our recent highs and if it fails there then it`s going to be tough for gold traders. If it breaks and closes above that level then this will likely trade up to the $1400-1460 range before any meaningful resistance.
There is little doubt that the 2nd Daily Cycle has topped, so we need to be patient with the decline. The timing for a top is acceptable, and the oscillators have clearly turned and are headed lower. The upward Cycle trend-line has been broken and Gold closed below the 10dma. At this point, we should assume that we have 2-7 sessions lower, with an target of between $1,290-$1,300.
For now, let’s continue to support the notion that a further move higher is coming. But at the same time, let’s acknowledge that a close below $1,322 would be Daily Swing High, a trend-line break, and a 10dma break. The next couple of days will be telling, because gold hitting that trifecta of events would certainly confirm a Daily Cycle headed towards the next Cycle Low.
Gold is still a few confirmations from a final declaration that this is a 1st Daily Cycle, but the evidence is mounting. For now, we’ll treat the first DC scenario as primary. “If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck”.
Since it’s extremely unlikely the Euro is in Week 3 of a new Investor Cycle, our expectations must be for the Euro to fall immediately from this point. The Daily Cycle does not support further upside here, as a Left Translated DC is necessary for a drop into a mild Euro ICL.
I’m looking for the miners to break below the June Low, but for Gold to hold above it. A decline by miners below the low should trigger exhaustion selling, but if Gold doesn’t confirm, it should mark a significant bear trap for investors in miners.
On the other hand, if Gold moves higher next week, Gold bugs should be fearful. With Gold at 25 days from the last DCL, a move higher through the 10dma ($1,294) and the declining trend-line will confirm that a new Daily Cycle is in play. On the surface, a new DCL is bullish, and many investors will interpret and trade it as such. But a new Daily Cycle will likely be the 5th in the current Investor Cycle, so should fail and lead to significant low.
The bearish performance to date likely indicates that once the Cycle ages that it could quickly turn down sold aggressively. This might well coincide with the dollar coming out of its own DCL late next week. Up until then though, gold still has a chance to prove me wrong. I believe even in the bearish case that gold should have enough steam to get it to $1,300. But now is its only chance to shine. If the gains cannot come quickly from this setup, then I’m afraid gold is setting up for yet another big fall.
Friday’s powerful reversal has me convinced that a new Daily Cycle is born. Based on the depths of this DCL it’s only natural to expect a decent (at least counter-trend) rally back up to the declining trend-line. But that’s about the extent of the “high probability” trade that I’m willing to predict. We can’t argue with the fact that this bear market remains in effect until proven otherwise, and therefore a rejection at that declining trend-line ($1,330 area) is a very reasonable expectation.
I mentioned in Thursday’s trade alert that we could expect a back-testing sell-off from that breakout, and that would be normal. But I did not expect to see anything more than a retest of the breakout line around $1,394. I certainly did not see a move all the way back into the ascending triangle. So this week will be an important week for gold because if this is a Left Translated Cycle, then Friday morning would certainly have marked the top of this Daily Cycle.
If this does end up being the start of a new Investor Cycle, then we won’t know for sure until the next Daily Cycle. The next dollar Daily Cycle should top very early and form Left Translated. If however it goes on to make new IC highs then it will almost certainly be the 2nd Daily Cycle of a young Investor Cycle. If this occurs, then gold will also form Left Translated and drop again, likely making yet another deeper low in June.
The good news is that with the culmination of this Daily Cycle we should be starting a new Investor and Yearly Cycle and it should be good for at least a $200-$300 move. Even if the bear market still has a hold on gold, we should expect violent counter-trend rallies. We know there is no way of knowing whether this will end up being the start of a major new bull trend. But in the least, this is shaping up to be a powerful and bullish setup.
Silver this week also finally shows that sentiment has also finally fallen to bull market lows. We know that when sentiment reaches these levels of extremes (see Green lines on below chart), that it has always marked a significant low. As Silver has retraced back to its 2 year support area (low $26 area), sentiment has dropped even further this time compared to past lows.
Last year my long term projection was for the markets to continue higher along with the dollar. The dollar has continued higher while the Dow and now the S&P have made new all time highs. This trend could continue throughout the year and we could see the dollar continue to gain strength.
How Silver is Making a Slow Recovery in 2014 April 17
Whichever option you choose, following the gold and silver price per ounce is an easy way to monitor your investment. With both precious metals looking to make a recovery this year, 2014 could be a great time to add silver to your portfolio.
Gold, Silver And The Mining Sector: Prepare For A Severe Fall
Gold’s progress was characterized by a sudden steepening of the curve leading to a final blow off when the price had gotten ahead of itself. We now need to see a similar occurrence take place during a sell off. However, this sell off, as torrid as it has been lacks that final spike down which occurs when even the most ardent bulls have had a guts full and finally throw the towel in. Gold and silver’s inability to sustain a decent rally suggests that it could re-visit and test its old June lows. Should this support fail to hold we could then experience a rather disorderly sell off taking gold back to the $1000/oz level.
Palladium Price Set To Go Higher On Supply Shortage April 14
As indicated previously, both platinum and palladium have broken out of a long trading trange. The following chart shows how palladium is holding up very well above the support line (which once was very strong resistance), and is even building up strength. The law of supply and demand will kick soon kick in, taking the two grey metals higher. In particular, palladium could surprise many with much higher prices in the (near) future.
Hold physical precious metals outside the banking system to survive the coming financial winter.
