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March 14, 2019 | Warned You: Here Are the Stunning Implications of Plunging Gold (Part I)

Przemyslaw Radomski

Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who takes advantage of the emotionality on the markets, and invites you to do the same. His company, Sunshine Profits, publishes analytical software that anyone can use in order to get an accurate and unbiased view on the current situation. Recognizing that predicting market behavior with 100% accuracy is a problem that may never be solved, PR has changed the world of trading and investing by enabling individuals to get easy access to the level of analysis that was once available only to institutions. High quality and profitability of analytical tools available at www.SunshineProfits.com are results of time, thorough research and testing on PR's own capital. PR believes that the greatest potential is currently in the precious metals sector. For that reason it is his main point of interest to help you make the most of that potential. As a CFA charterholder, Przemyslaw Radomski shares the highest standards for professional excellence and ethics for the ultimate benefit of society.

Gold is turning vigorously lower. And not only gold at that. Red, red, everywhere in precious metals you look. The silent scream we wrote about yesterday brought serious repercussions. In this article, we devote extraordinary attention to the short-term picture throughout the PMs complex. Stay tuned as in the coming day(s) we’ll explain here how it affects the long-term charts and the 2012-2013 – now link in gold. That will be so much more than a great and actionable summary.

Yesterday’s Alert was quick and timely as it was important to keep our subscribers informed as gold and silver approached their resistance levels. Today, both metals are moving lower in the pre-market trading- silver erased more than 48 hours of gains and gold more than 24 hours of gains.

Let’s being with a look at the overnight performance. It’s important because it shows prices are already much lower than it might appear based on the daily charts.

Feeling the Pulse of Gold, Silver and USD Index

A few hours can make a lot of difference, especially for the silver price. Silver is not only below yesterday’s lows – it’s also below Tuesday’s lows. About 15 cents below them. The attempt to ignite a rally seems to have failed. In case of gold, it’s not as crystal clear, but still clear enough. The yellow precious metal moved below yesterday’s lows, erasing the entire daily gain and a invalidating the brief breakout above $1,310. It’s almost as low as it was 48 hours before. This means that the $1,310 level that we described as strong resistance, has indeed held. This adds the necessary context to the following daily charts.

On the above chart, we see that silver reversed, that miners moved higher, but only a bit, and that gold rallied. Based on the previous intraday charts, we already know that both precious metals have already invalidated yesterday’s strength and that there was no breakout above the resistance levels.

We warned that if the USD Index declines once more before rallying, PMs might move a bit higher, but that it would likely not be anything to call home about – and it seems that is exactly what has happened.

The USD Index moved to the lower one of our mid-March target areas.

What’s so special about the middle of March? Why are the targets at that time?

It’s because of the triangle-vertex-based reversal that suggested an important top or bottom in mid-March. Please note how well this technique worked previously – after the first month of the year, the USDX bottomed and moved to new yearly lows. Based on the most recent short-term decline, it seems that the next turnaround is going to be a local bottom or that the bottom has already formed.

Before moving back to the PMs, please take a look the bottoms that we saw since early 2018. For more than a year, we’ve been seeing higher lows. We also saw higher highs on average, but it’s not as clear, as it is in case of the bottoms. This is the very definition of a bull market – higher highs and higher lows.

It’s also interesting that the pace of growth of the USD Index declined after May 2018. You see, the USDX has actually… Corrected after the powerful April – May 2018 upswing. It’s not clearly visible, because it’s a running correction. This is the kind of correction where the market needs to take a breather, but it’s actually too strong to decline during this correction, so it just moves sideways. It’s characteristic of only the strongest bull markets for the sideways movement to take the price higher on average. One of the general trading tips is to be on a lookout for these corrections as they can provide great trading set-ups for the following moves. And that’s exactly what we saw in case of the USD index.

When the USD Index breaks above the corrective pattern, it’s likely to soar and take the PMs to much lower levels. And it seems that it’s about to take place.

Moving back to the PMs, we would like to point your attention to the way silver corrected.

The move in the white metal is very similar to what we saw in July 2018. In particular, it’s similar to both situations: from July’s beginning, and from its final part. Silver moved back to the previous low and to the 20-day moving average (marked with red). Silver’s shooting star candlestick is also a bearish indication because that’s the way in which silver ended the early-July 2018 correction. Yesterday’s reversal was not confirmed by strong volume, which would be a concerning factor if it wasn’t for two facts:

  1. The early-July 2018 reversal also formed on relatively low volume
  2. It’s silver. Many general technical rules don’t apply to silver or they apply, but in a non-standard way (silver’s breakouts often turn into fakeouts etc.). This is what makes silver so difficult to trade for beginners.

The implications for short-term precious metals charts are bearish.

We hope you enjoyed today’s analysis, and we encourage you to sign up for our free newsletter. You’ll be updated on our free articles on a daily basis, and you’ll get access to our premium Gold & Silver Trading Alerts for the first 7 days as a starting bonus. And yes, it’s free. Sign up today.

 

Thank you.

Przemyslaw Radomski, CFA

Editor-in-chief, Gold & Silver Fund Manager

Sunshine Profits – Effective Investments through Diligence and Care

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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March 14th, 2019

Posted In: Sunshine Profits

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