Gold & Commodities

The Gold & Commodities category is a sub-section of General Market Analysis that includes charts and commentary associated with precious & industrial metals such as gold, silver, and copper as well as various commodities such as oil, gas, wheat, corn, etc…

Dec 192014
 

CDE (Coeur Mining Inc.) has broken above the neckline of the IHS pattern, triggering the alternative entry or an add-on to the initial position taken around 4.20 (bottom of the right shoulder). Targets have been added with T3 & T4 only potential, not official, long-term targets at this time, pending a breakout of gold above the downtrend line and how silver trades going forward.

The ultimate success or failure of this trade (although it is already up over 20% from entry) will ultimately depending on whether or not my primary bullish scenarios for gold & silver play out in the coming months. Therefore, the potential 3rd & 4th targets are for longer-term traders & investors with a bullish outlook on silver & gold that took CDE at the bottom of the left shoulder, possibly adding here on the breakout, while employing wider stops. The initial targets (T1 & T2) are for typical swing traders and have a decent shot of being hit even if gold and silver only move back up to the top of their recent trading ranges before reversing.

As always, the price targets are set slightly below the actual resistance levels in order to help assure a fill, should prices reverse just shy of resistance. T4 is aligned with both horizontal resistance as well as the approximate price measurement of the inverse head & shoulders pattern (IHS). Those who established a long position towards the bottom of the right shoulder might consider raising stops to the 4.60 level at this point. Previous & updated daily charts below.   click here to view the live, annotated chart of CDE

Dec 172014
 

Following the recent potential wash-out/bear-trap move below the 114.50ish triple-bottom support, GLD has been backtesting that support level from above, possibly building the energy to mount a sustained breakout above the yellow downtrend line (bullish scenario), while a solid move back below 114.50 & especially the 109 area would be bearish. While the longer-term trend is still down to sideways, the current short-term trend is up with GLD making a series of higher highs & higher lows over the last 5 1/2 weeks.

GLD 2-day Dec 17th

GLD 2-day Dec 17th

 

This is the fourth divergent high in the US Dollar Index over the last 4+ years. The three previous divergent highs resulted in significant corrections. Should those divergences play out for another correction, precious metals & commodities are likely Continue reading »

Dec 162014
 

I received the following question (late last night) regarding yesterday’s price action in precious metals & the CDE (Coeur Mining) trade idea, posted below:

Q: Wow, what a turnaround today. Was looking so strong in the early afternoon and they got dumped like all gold mining stocks. Curious as to your thoughts on it now.

A: My take is that the selling in the broad markets is starting to trigger forced selling/margin calls on both retail and the fully leveraged institutional traders which forces them to liquidate gold & silver (along with their long-side/bottom calling bets on crude). Hard to say how much more of that is left but my take remains that commodities and metals has a lot less downside at this point than do equities. I may be proved wrong but even if I’m right on the stocks down/commodities and metals up in 2015 call, just about everything gets sold during panic sell-offs. Therefore, it could get worse before it gets better in the metals & commodities although putting all that aside, CDE still looks fine from a longer-term technical perspective.

FWIW- I learned (the hard & costly way) years ago to keep my trading light during the month of December as trading volumes dry up which in turn opens the door to a few big “stop-clearing” counter-trend days in just about every asset class out there.

As long as gold remains above the 1180 (spot gold)/114.50ish (GLD-gold etf) levels I remain cautiously bullish on gold. Both yesterday & today (so far) have seen gold backtest that key support level following the recent fake-down (false breakdown) and break back above that level, which was defined by the mid & late 2013 lows as well as the early Oct 2014 reaction low (i.e.-triple-bottom). As previously stated, I view the fact that gold was able to reclaim the 1180 level as quite bullish (a bear-trap) although there is still quite a bit of work to be done in order to help solidify the longer-term bullish case for gold and with prices still precariously flirting with the 1180 level, it can (and most likely will) break either way sooner than later.

As per yesterday’s update on gold, I believe that the 1250 area is an important overhead resistance level, defined by both the downtrend line as well as horizontal resistance. Any solid & sustained break above that level would considerably strengthen the longer-term bullish case for gold while a break below the recent lows around 1130 would likely usher in a new wave of selling. Although my read on the charts is for an upside resolution of this recent trading range, trading is likely to continue to be difficult with large prices swings as gold chops around in what I refer to as “no-man’s land”, which is a battle ground between the bulls and the bears.

Silver has moved sharply lower over the last two days, moving back below both the 16.05 horizontal support/resistance level which it had just recently broken above, as well as the downtrend line (see previous daily chart or click the link to the live chart of $SILVER on the “Live Chart Links” sidebar). However, for now, both silver and gold are clearly in short-term uptrends which began with the Nov 5th lows (and uptrend simply being a series of higher highs & higher lows).

Again, I remain “cautiously” bullish on silver & gold at this time primary for a few reasons: 1) Both are still trading not far above multi-year lows within a larger downtrend. Despite the short-term uptrend, it is much too early to say with a high degree of confidence that the recent rise off the Nov 5th lows is anything more than a counter-trend bounce. 2) Both gold & silver have yet to take out their primary downtrend lines which are generated off their respective 2011 highs, i.e.- both silver & gold are trading below significant resistance. 3) Although my scenarios on the US Dollar, Euro, & Yen appear to be playing out as all three appear to have recently reversed trend, as with gold & silver, it is still too early to say with a fair degree of confidence that these are anything more than brief, counter-trend moves in these currencies.

Dec 122014
 
$GOLD daily Dec 12th

$GOLD daily Dec 12th

I’ve mapped out my preferred scenario in this updated daily chart of $GOLD (spot gold prices). My current expectation is for a reversal around 1250 followed by either a relatively shallow pullback (first set of arrows) or a deeper pullback to around the 1180 level before prices move higher to breakout above the downtrend line and move considerably higher. The latter scenario has the potential to form a very symmetrical Inverse Head & Shoulders Reversal Pattern which would project to around the 1340 level.

Of course I’m open to all possibilities, including both a more immediate breakout above the downtrend line (which aligns with my call for a near-term pullback in the $USD) as well as one more new low in gold before a more lasting bottom is in place. As such, this chart will be updated as any significant technical events develop.

click here to view the live, annotated daily chart of $GOLD

Dec 122014
 

The EUR/USD is attempting to break above the bullish falling wedge pattern. A move to any of the above targets (T1-T3) would likely give a boost to commodities & precious metals. Likewise, the USD/JPY (US Dollar/Yen) pair looks poised to drop about 9% from yesterday’s highs. With the Euro & the Yen comprising the bulk of the US Dollar index, if my analysis is correct, that long overdue correction in the dollar has finally begun. That, coupled with the fact that Silver & Gold have both recently broken above the previously highlighted resistance levels adds to the near-term bullish case in the precious metals & mining sector.

Dec 092014
 

SIL (Silver ETF) has impulsively & convincing taken out both the downtrend & 16.05 horizontal resistance level, thereby greatly increasing the odds that the near-term upside price targets (T1 & T2) will be reached. Consider a stop below 15.65 or higher depending on your preferred price target(s).

SLV daily 2 Dec 9th

SLV daily 2 Dec 9th

 

I also continue to closely monitor the US Dollar, Euro, & Yen for the expected trend reversals, including a breakout of this bullish falling wedge pattern in the EUR/USD currency pair. Should these major currencies reverse trend, even if they just experience a healthy counter-trend correction that might only last a week or so,  that would almost certainly add to the near-term & possibly longer-term bullish case for gold, silver & mining stocks.

EUR-USD daily Dec 9th

EUR-USD daily Dec 9th

Dec 092014
 
CDE daily Dec 9th

CDE daily Dec 9th

CDE (Coeur Mining, Inc) is a silver mining stock which may be forming the right shoulder of an inverse head & shoulders reversal pattern. Aggressive traders anticipating a breakout in silver along with an accompanying rise in the mining sector could take a partial or even full position here at what could prove to be the bottom of the right shoulder, placing a stop slightly below the recent lows, say around 3.85, while adding to a full position if & when prices break above the neckline (assuming that prices do move higher from here & the symmetry of the pattern remains intact).

More conventional traders might opt to wait to see the right shoulder completely formed with a move back up to the neckline, only initiating a long position if & when prices breakout above the neckline. The approximate measured move for this pattern would bring prices to around the 7.50 level (about a 70% gain from current prices) but the exact price target(s) will follow, assuming the pattern continues to play out.

CDE will be added as an aggressive Active Long Trade here and also as a Long Trade Setup & Long-term Trade Idea with an entry to be triggered upon a break above the neckline (again, should one or two fairly symmetrical right shoulders form).

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