Technical Brief: Silver sell signal, Gold Holds

Gold

UPDATED 2:50 EDT click/jump

Technical Summary

Today, Silver has given us a short signal with expectations of gathering steam lower. Our own indicators have given us no trades to do over the last 20 days and this is consistent with classic technical analysis. Today however , it will likely give us a short trade in Silver on the close. As it outperforms higher, so Silver leads in selloffs. Gold has broken a support area today and is now working in the last area of congestion post the Brexit rally. Classic indicators say the "pet rock" is range bound. Many technicians cite the 1340 to 1360 range as their position, with a break of that range spurring another $20 move in the direction of the break..- Soren K.

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UPDATE 2:50 EDT
Where we are since this morning, a little lower
Silver BBand Momentum Trade: using 1.5 STD for band width not the standard of 2.0
Risk 1 to make 2
Assume 50 percent chance of follow through
Assume high chance of target hit in 3-4 days if follow through (slippery slope of expanding volatility)
Stop loss is placed and trailed lower daily as market moves
Not a time waster:: if not ITM on day 2, it is closed it out.
Execution
Day 1: Short right here at 18.86
Overnight stop losses are: 19.32 (settle)-19.46 (trade)
Profit levels are 1.5 to 2x risk. 200% of 46 cent risk = 92 cents= 17.84
Day 2: keep all stop and profit levels in place
At EOD if mkt not below 18.86 then close position (momentum is false or delayed)
If trade is ITM ( under 18.86), move stoploss to entry price of 18.86
Day 3: mkt comes in lower, consider trailing stoploss down the BBand lower level boundary.
Disclaimer: think for yourself, and understand this is a shortterm volatility based trade that is wrong 50% of the time.
Feel free to say "You were wrong" if market rallies and it makes you feel better. this is a swing trade and not a macro investment. Another trade in another market will come soon enough.
The Reversal:
To those of you bullish the next 3 days, this information is equally relevant. They are just numbers. The numbers here are volatility and momentum based . The concept is that volatility cycles can be predicted with less noise than actual direction. When an expanding volatility trigger is hit, you simply go with the direction of the trigger day. If the market does not move in this manner on day 2, then you should consider buying the dip . Good Luck
-Soren K.

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Gold

Our own signals are designed to handicap the speed of a breakout if it occurs. We are friendly to Bollinger Bands in combination with other tools as an indicator of momentum should an area be breached.For now, lets say all our other indicators are in line for a strong move if we settle above 1361 or below 1333, and look at a couple trend lines and congestion areas.

Lines: Blue is dead, Black looms above, and Red is Gold's last defense

interactive chart HERE

Gold Brief:

Low volatility cycle should be almost done: BBands are now "pinching" indicating it will take less of a push to get Gold going.
Bearish: The Blue trend line is broken
Neutral: a sideways move through the Blue trend line lessens its importance
Neutral: Red rectangle signifies congestion and support.
Bearish: the black trend line combined with the congestion below is not a bull flag
Bullish: OI is upticking, signaling fresh shorts in the market, auguring for a short squeeze, but not any time soon
BEARISH: Silver has triggered a BBand signal

DEC GOLD Resist: 135050, 135940*, 136430 ST Trend: Sdwys(134580) Supprt: 133980*-, 1324- Obj: None TRP: 1359.40Comment: Trade remains caught between 133980* support and 135940* resistance. A close over 135940*rekindles bull trend forces to again reach for 138060*. Friday’s selloff puts the bias of congestion down. Aclose under 133980* implies selloffs to 1324-1320.

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Silver

This is not a dip to buy if you are trading the market. We'd rather buy strength than weakness here. Only a settle in the BBand today negates the momentum lower started today.

Compare the Gold chart indicators above side by side with Silver.Blue, Black and Red

Silver Brief:

Low volatility cycle is done: BBands are widening in opposite directions. a settle under the previous day's BBand level indicates follow through likely
Bearish: The Blue trend line is broken
Bearish: the black trend line combined with the congestion below is not a bull flag
Bearish: TheRed box of congestion is broken.
Bullish: OI is upticking, signaling fresh shorts in the market adn auguring for a short squeeze, but not any time soon

SEP SILVER Resist: 1960+/-, 1976, 2022* ST Trend: Sdwys/Down(19305) Supprt: 1918*, 1860-1840 Obj: 1840? TRP: 2022.0Comment: The market is signaling a turn lower and calls for pressured action to test 1918* support. A closeunder 1918* could send a wash to 1840. A reluctance to return to selloff under 1918* could prompt minorrebounds and congestion near 1960. A close over 2022* is needed to rekindle bull trend forces to againreach for 2100+.

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Conclusion:

Silver

has triggered a sell signal on our momentum system.
it should continue lower violently at first and then slow in its descent a few days later if the signal is confirmed EOD.
this is not a dip to buy if you are trading the market.
We'd rather buy strength than weakness here.
Only a settle in the BBand today negates the momentum lower started today.
Compare the Gold indicators above side by side with Silver.

if you are playing short Silver today

a stop should be placed at the previous day's BBand lower band price and trailed every day lower thereafter.
Profits should be taken a a function of 2 to 3x what you originally risked or as a function of your own comfort level.
The risk/ reward on this trade deteriorates significantly after 4 days as profit takers and dip buyers start pushing back (wider volatile ranges are likely next)

Gold

Gold has not triggered a sell signal yet.
Silver will be weaker than Gold in a selloff
Gold's status as being slowly remonetized may be a factor in its relative strength to Silver going forward.

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Good Luck

- Soren K.

sorenk@marketslant.com

Twitter: Soren Kierkegaard @SorentheK