News, analysis and commentary for gold traders and investors

"Be Right - Sit Tight"

Jesse Livermore
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Gold Market Wire

News, analysis and commentary for gold traders and investors

Gold Market Opening

Gold/Silver Ratio Approaching Support

February 23, 20201 - (Gold Market Wire) - A lot of trading comes down to balancing the cliche aphorisms that rummage around in your head...unless, of course, you want to join the algo mob and do what every computer is doing in lock-step. (We don't! ... because those algos can be predicted with the naked eye, as they all do pretty much the same.) Right now we are poised between "running profits", as our shorts on the ratio continue to be profitable, and falling into the "pigs get slaughtered" trap.

Our favourite trading vehicle, the Gold/Silver ratio, made the next lurch lower. We wrote yesterday that just about "either side of 65.00" was a band of support and that if we would either bounce up or gap down. Well, we did the latter and went all the way to down 63.94. Now an even bigger support line is coming into view, and will demand our attention. The chart lays it out.

63.50 is the support line

(addendum: a zoom out to see how the support line was created)

zoom out

With our move down below 64.00 and the big support staring at us we are taking profit on what has been a very solid short. We have little doubt that we haven't seen the end of this trade, but right now, we think money realized is better than holding through a possible retracement. No one, but no one, picks perfect tops and bottoms, and we're not about to try. We could plow right through 63.50 and start a whole new wave lower, but we will assess that when/if it happens. For those who maintain a strongly short posture, lightening up, or cutting by half could be the order of the day.

As that old bootlegger said "no one ever went broke taking a profit".

In tandem with the above, we would be remiss if we did not note the EUR/USD move above 1.215. We remain Dollar bulls, against the mass market sentiment. Our bearish stance was taken between 1.22 and 1.23, and made low down to 1.195. We expected more momentum, but we are not inclined to close out all of our Dollar length in the face of a chart position like the one here:

challenging, but wait to see if the channel holds.

...zoomed in

So we start the day largely on the Metal's sidelines after a good run. The market is choppy and has the feeling of "turning and churning", and unless you like trading gamma from your vol. position, there's not a lot to be had in such a market. Many will chase their tail when the market churns. We will simply wait for another point of entry. With the US Dollar in retracement mode, Spec traders and wild-eyed gamblers may want to try length in Gold as its recent under performance vis-a-vis Silver may be redressed in the short-term. While the channel holds we remain Dollar long.

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