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Silver & Gold: Bearish Pattern Still On Chart

August 18, 2014

The GLD has simply refused to invalidate the bearish potential on the chart, and silver looks simply terrible.

Now, as you are probably sick of hearing from me by now, my ideal pattern still had me looking higher to the 130+ region.  In fact, I told you last weekend that I was expecting a test of the 124 region.  And tested it we did.  The low struck this past week was 124.39, before the market moved higher off that level.

As I also said last week, the pattern with which we dropped into that region “should” give us the clues as to whether we will break down further, or if it is a corrective pullback setting up a move higher to the 130+ region.  But, unfortunately, I am unable to provide clarity on this perspective, as the market has not provided it to me.  The initial drop off the highs has made it a bit unclear to me at this time, so we will have to leave it up to support and resistance over the next week to light the way.

The bare minimum level which MUST be taken out is the 126.07 level.  Below that level, and we have a 1-2, i-ii, (1)-(2) (i)-(ii) set up, which means the market can simply fall away quite strongly at the open on Sunday night.  However, if the market is able to move through that level, then the main reason of resistance resides at the 127.10 region.  If the market is able to move through that region impulsively, then we can view the market as a 1-2 set up off the b-wave low, and in the heart of a 3rd wave in the c-wave targeting at least the 130.50 level, with the potential to extend to the 133.50 level.

So, while the micro structure is not entirely clear, we have solid guidelines as to what we need to watch over the next week.  And, should the market chose the bearish perspective follow through, a drop below the 123.21 level opens the door to at least the 119 level, but more likely taking us to a test of the 114/115 region.  Assuming we do see those lower levels, we will be watching the structure as well as the technicals to then determine if this is a larger d-wave, or if we are indeed heading to the lower lows sooner rather than later.

I think early this coming week will be the tell.  If the GLD is not down by 4-5 points early in the week, it makes the potential to reach the 130+ region quite high.

And, as we have been saying for several weeks now, silver still looks quite bearish.  Until it is able to at least move over the 19.90 region, and take out the down trend channel it now finds itself within, and then follow through over the 20.20 region, there is nothing to even speak of on the upside in silver.  Until those levels are taken out, we can even see silver begin the heart of a 3rd wave down, which is signal by a strong break down below 19.25 early next week.

For those of you that have reviewed the Commitment of Trader’s report this past week, you will also know that the commercial traders have become even more bearish over the last week, whereas the larger speculators (usually referring to the hedge funds) have become even more bullish.  More often than not, it is the commercial traders that are on the correct side of the next market move, so this is usually looked upon as a very bearish indication.  While it is not necessarily an immediately bearish indication and a rally to the 130+ region in GLD can still occur even with a report this bearish, it does mean that attempting to trade for it has become even more risky, at least as long as we are below 127.10.

In conclusion, I have been “hoping” for a run up to the 130+ region in GLD to complete this e-wave of the 4th wave, but the chances of it happening are becoming much slimmer.  In fact, early next week should provide us with solid evidence of whether it will happen or not.  So, whether you have a bearish or bullish bias – and I know we have some on the elliottwavetrader.net with strong feelings on both sides of this trade – you must recognize the levels of support and resistance I have noted herein.  And, please do not maintain your bias if the market provides a clear directional move over the next week, as I suspect it finally will.

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Discussion
36 Comments
    Aug 18, 2014 18:31 PM

    The HUI looks great and its moving averages haven’t looked this good in years.
    http://stockcharts.com/h-sc/ui?s=$HUI&p=D&yr=1&mn=3&dy=0&id=p03714609193&a=364007429

    Aug 18, 2014 18:37 PM

    I believe that the gold and silver have bottomed last year. They have been steping up albeit slowly. Not loading up on the cheapest asset at this point is your loss.

      Aug 18, 2014 18:38 PM

      Agree completely.

      Aug 18, 2014 18:57 PM

      I’m in for the longer term since Dec. 2013 and Bob Moriarty
      believes the bottom is in as of August 15. Give or take a few.

      Excellent comment. The masses are always hood winked.

      This time is no different after 3 years decline.

        Aug 18, 2014 18:16 PM

        Most people are risk averse so they never buy at the low since it looks the shakiest at the low. When the asset price rises to a comfortable level, they pile in just on time for the next crash to shake them out. Considering that gold and silver do not stay below production cost for too long, I’d rather be early than late. For other asset, I resort in profit taking much more than gold since they can go to 0.

          Aug 18, 2014 18:26 PM

          Oxymorons don’t agree though.

          Like you said its their loss.

          Gold is great, gold is good

          Anyone who doesn’t own gold

          is a ….SCHMUCK !!!!! lol

            Aug 18, 2014 18:03 PM

            Its true, their all schmucks.

            Don’t blame me about my mood.

            Blame it on you know who.

            If I see another schmuck ……………………….
            ……….. ……………………………………..!!!!!!!!!

    Aug 18, 2014 18:12 PM
      Aug 18, 2014 18:32 PM

      Get Shorty…with Danny Devito.

      Time to short… The Spoos.

      If you don’t know that term
      then people should not be
      shorting. Of coarse all shorts
      will be in luck now with a fat
      pig stock market. Soros is betting
      on huge decline.

      Also has a big bet on miners.

    Aug 18, 2014 18:24 PM

    $1224

      Aug 18, 2014 18:36 PM

      Do I hear 1224…anyone out there …1224 again…

      Any takers. ?…1224 sold to the fantasy bidder.

      CONGRATULATIONS !!!!!!!! enjoy your hot air balloon.

      Aug 18, 2014 18:19 PM

      Are you going to give a number $1050 when $1224 is reached, just like last time? It could always be lower. The lowest number I have heard is $250 from Harry Dent a few months ago. No one is going to hit the lowest price, unless by pure luck.

        Aug 19, 2014 19:20 AM

        Lawrence : “luck” is when preparation meets opportunity, everything else is serendipity. As for what I’ll say should gold reach $1224, I’ll let you know then. Right now, my Wave Count is still on target for $1224, and cycles still agree.

          Aug 19, 2014 19:50 AM

          Elliott Wave…..lots of luck required.

          I have a real crystal ball that changes
          color and even gives you the future but
          you have to be very naive first before
          you look into it.

          Otherwise, it doesn’t work.

            FIBONACCI CHART………LOOKS GOOD…….

            see kitco…….Aug.18 for details…….

            Aug 19, 2014 19:07 AM

            I was following Elliott Wave International in 2006- 2007 until people showed me that they got 12 out 13 wrong in their predictions. My take is no one can predict the future. If technical analysts can stick with their predictions and not change their number all the time, I may change my mind. My frustration has been, if I act based on their prediction today, they will come with another number which nullify their previous one and accuse me not following them.

            Gil
            Aug 19, 2014 19:09 AM

            Lawrence, that is a very, very astute observation. The gold analysts would not be dinking around with their newsletters if they were that good. They would be hobnobbing with Soros and Buffet. I have a rule when it comes to trying out a newsletter writer. I paper trade their recommendations for 3-6 months. 90% have been total busts but then how could they not be. If they were that good they would be competing with Soros and Buffett to see who becomes the first trillionaire.

            old rule……….those who can , do….those who can’t teach…….

    Aug 19, 2014 19:57 AM

    For Lawrence and other gloomoids!!
    https://www.youtube.com/watch?v=kyFyAqLtHq8

      Aug 19, 2014 19:00 AM

      I hope by gloomoid you mean gloom and doomer not glomoid. I am actually pretty optimistic about the future and believe that the market will revert back to the mean. That is why I buy more silver than gold. I am sure in the future some time, the honest money will win and even governments have to accept some commodity in the currency composition instead of total fiat. I am saving for my retirement.

        Aug 19, 2014 19:48 AM

        Most of Chopin’s music is full of optimism Lawrence. Just having a cheap laugh! Best, A

    LONDON UP…………….NY.DOWN……………. the FIX IS NOT fixed , manipulation continues…the same ole, same ole……….

      Aug 19, 2014 19:43 AM

      They seemed really pissed.

        Aug 19, 2014 19:06 AM

        Some people suffer from perpetual dyspepsia. And some are simply misanthropic by nature.

    Aug 19, 2014 19:45 AM

    BTW, I guess gold is likely to go down or stay where it is before and during Jackson Hole conference.

    cfS
    Aug 19, 2014 19:49 AM

    OFF TOPIC:
    There is a growing problem in English and French universities with support for ISIL.
    http://www.thedebrief.co.uk/2014/07/a-british-student-is-on-trial-after-allegedly-smuggling-16k-to-jihadists#.U75q2_ldWzs?utm_source=outbrain&utm_medium=cpc&utm_campaign=Life

    Recent opinion poles in France show about 25% of all under 35 year olds view ISIS or ISIL in a favourable light. (This rises to over 35% on campuses!

    At least 200 people with EU passports are known to be fighting with ISIL.

    cfS
    Aug 19, 2014 19:59 AM
      Aug 19, 2014 19:07 AM

      It THAT doesn’t bring politicians to their senses, NOTHING will!