Gold and Silver Hanging by a Thread

Gold and Silver look like they could be a short sellers wet dream right now. Gold is struggling to get past resistance at the daily 21 Moving Average and the downward trend-line.

It is also worth noting the action on the US Dollar index which is looking increasingly bullish right now. If the Dollar manages to break higher out of its bullish flag, we could see fresh downward pressure on gold and silver. This is because traditionally gold is seen as a hedge against a falling dollar, so a rising dollar does not support gold.

The Retail Traders Open Position ratios, a key sentiment reading of what retail traders are thinking, reveals an extreme bullishness for the metals, a tell-tale contrarian warning signal.

For Silver, the path of least resistance still remains bearish (see above video). A short position can be established at the break of $31 mark, with targets at $30 and $28.50.

For positioning a short on gold (and if you are afraid of standing in front of a freight train in case gold runs up higher) you can wait for a break of the low of today’s bar at 1653. A stop can be placed at two times the average true range or at 1692.

In terms of targets for gold, I am looking for a test of 1600 and then a move to 1577 which is the S2 Monthly pivot. As shown on the above video, a 78.6% fibonacci retracement of December-February swing places support at 1586 which is a nice cluster around the S2 Monthly pivot.

Am I selling an ounce of my gold bullion because of this? Not at all. Long term, I am still bullish on gold. But in the short term, gold investors can look forward to buying the yellow metal hopefully at cheaper prices.

5 Comments

  1. Hello, Alessio. Thanks for the video. Do you think you will be able to do a video on how to draw pivot points in the future?

  2. And here I am, aiming for it to go to 1800.. 🙂 Lets give it three months.

  3. Nice work Alessio, it took a longer time line than you stated in the video but you were pretty much bang on with the price levels. Keep up the good work.

  4. I’ve been watch gold for a while now and I couldn’t understand why gold has evened out and infact now we see it going down in value, $1,538.50 is the price for gold as I post this reply and its falling. So why is it so, according to some Finance Reports “worries about Europe’s debt crisis and investor demand for the dollar spurred flight from precious metals”. What I won’t to know is why do investers rush to the US$ thus pushing it up (making them appear more expensive for buyers using other currencies) when according to most Finance analyst the US$ is doomed, its trash, its finished? Wouldn’t it be better for investers to buy up gold (thus pushing gold up)rather than buying up US$ which are more risky? Is their something else at play here that I haven’t seen? (ps. Love your blog Alessio.)
    Cheers Marcus

  5. Alessio,
    first, great work thank you. 2nd, any plans for trainings in USA,? namely LA or any west coast cities.
    thx Jonny

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