Weekend Update – Gold & Silver – August 19, 2012

Weekend update – Gold

$1,620 is still a key reference area in the near term, but the “triangle” pattern on the one hour chart (see left hand side below) inside the triangle pattern on the daily chart (see right hand side below) is what is most important to me at this time from my perspective.  The triangles are showing a battle of increasing demand and steady supply.

I don’t see gold staying in a “range” or “noise” for long, and the “vertical development” afterward is what I mostly want to be involved in as a trader.

There are still other major key reference areas to keep an eye on in the intermediate-long term in my opinion.  The major trendlines of the “Descending Triangle” on the daily/weekly chart are the dominant pattern.  This is a pattern of increasing supply from longer term traders and investors, with a fixed level of demand likewise from the longer term traders and investors in the bigger picture.

The upper trendline continues to get closer to the price action and is currently situated at a level of $1,650 approximately, which was a very important “High Volume Node” of a previous major consolidation pattern from March-May of 2012.  (I have this pointed out in a previous post here)

At that time when the consolidation broke down I didn’t feel we would be seeing $1,650 for quite some time.  This was detailed in the previous post to the one above.

The analysis of the charts in gold on this blog have been consistent and objective since the beginning.

Weekend update – Silver

There was a breakout of a small “Symmetrical Triangle” on the daily chart in Silver that was identified previously on the blog.  At the time I felt that the apex of the triangle should offer initial support and it has held so far.  I am still cautiously bullish even though the near term patterns are showing increasing demand with each selloff due to the structure of the bigger picture.

I would trail a stop should silver breakout out of the new upper trendline of the new triangle to below its nearest reaction point of the lower trendline to limit the risk.

The left hand side chart is a daily chart zoomed in for 3 months.  These patterns are “miniscule” compared to the right hand side dominant “Descending Triangle” pattern on the daily/weekly chart.  The weekly pattern should always be respected.  And respect is handled with correct “money management” and “position sizing” principles.

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