What a month for the precious metals and miners. Usually, as proven on the chart in this article, June has been seasonally the weakest month of the year. Not so in 2014.
The first days of the month appeared the start of a new break down. Both the price of gold and silver price broke to new lows at the critical point of the wedge recently. It was nothing less than a false breakdown.
Silver has just broken through it’s long term downtrend line & broken out with gusto with a $1 move. Gold at $1320 is about to do the same.
Today’s prices rise on strong volume are indicative that the precious metals have bottomed and are now set to rise & are now “back in play” to the long side.
And here is the Gold Oscillator showing the false breakout down & the true breakout to the upside.
Chart courtesy: Goldchartsrus.com
Moreover, apart from the very encouraging chart and technical pattern, sentiment has risen from 20 to 30, according to Sentimentrader.
And then there is this, also from Sentimentrader:
Precious metals jumped on Thursday, with gold showing its largest one-day gain in more than six months. In the past 30 years, the S&P 500 has closed at a 52-week high on a day gold spiked the most in six months 6 other times. All 6 saw stocks decline over the next thre weeks, averaging -2.1%. The dates were 6/7/89, 9/14/92, 2/13/9, 11/4/10, 7/22/13 and 9/18/13.
The miners have confirmed the breakout with exceptionally high volume on a 5% rise of the mining indexes (GDX, GDXJ, HUI).
What to look for going forward? Obviously, prices will retreat to test the breakout poins. The key things to watch are volume (average or preferably above average volume is required on up days) and price support points as shown on the above gold and silver price charts (they should for sure hold). The breakout will be “official” if these conditions are met!