Be very careful here
1- On Jan. 31 we said Silver had triggered a VBS trade above $17.40. We also said that Gold was "close"
That post HERE
2- Silver then moved very quickly to a high around $17.74 in March futures. So far, so good.
3- But Gold has to settle above $1219.50 today to trigger its own alert. It has not done so yet.
From an entirely different discipline Peter Hug said this today:
Gold has finally managed to push to our target of $1,222 amid the Fed’s decision to hold on rates.
Which is relevant to us. A settle over $1219.50 is good. A settle over $1222 is much better for momentum. And it is noteworthy $1222 is a target that has been obtained and therefore serves as valid resistance.
Peter continues:
A close above the $1,222 level sets up $1,232, with a break then suggesting $1,250. Downside support now resides at $1,208. Full Story HERE
Combining Peter Hug's numbers with the VBS we get:
- $1222 gets you $1232 quickly, and possibly $1250.- BOTH
- A break down sees first support at $1208, close to the BBand mid point. BOTH
- Under $1208 and $1185 is on radar again.- VBS
4- And Silver has gone back into the BBands. If it settles inside, the direction risk/reward will be invalidated as the bottom band continues to rise. NOTE: We use 1.5 Band widths in Metals, not the traditional 2.0
Analysis: Pause or Top, Either way The Risk/Reward is in Danger.
Can the metals continue higher? Of course. But the VBS is saying if you bought Silver at 17.40, your stop out is now $1755 on close. Gold pierced but has to settle above $1219.50 for a VBS alert to go off.
Can this be a dip to buy? Yes. Can it also be a top that will reverse and touch the bottom BBand in a very fast move? Very much so. That is the nature of VBS trades. When you are right directionally, it rewards you in 3 days or less. When you are not right directionally, reversing direction should be seriously considered. That is why the signal is good. VBS says, "We do not know which way the market is headed, but it will head there quickly. Hard reversals inside the BBands are very possible." Look out.
Gold has to settle above the number to retain momentum. And if it does not, Silver may be a massive sale. If long Silver on the VBS, use $1755 as "close" stop. Use point of entry as "print" stop. If Gold closes above $1220, then more volatility awaits with a bias to the upside.
Good luck
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