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 and Silver Market Update

Silver Fails at Resistance; Gold Routed as USD Continues to Rally

November 23, 2021 - (Gold Market Wire) - It looks like we were right to be nervous about that overhead resistance, and the continued US Dollar rally yesterday, and those that took the opportunity to exit the market have done well. As we said early in the European a.m., "For the nervous type, you can trade out of length here and get completely flat, awaiting developments. These days, one could hardly blame people for such a stance." The importance in sizing a trade properly for the market environment has been re-affirmed, once again.

We now draw our Silver channel, and show how it has developed, and what it implies:

channel...touch down on lower trend

The question for Silver now becomes..."was that it?". Is the sell-off done?

The big news, however, is the rout in Gold. 1.5% lower yesterday or twice the rout of Silver, which is certainly unique, on a daily basis. A small follow through today, but, interestingly $1804 - that previous upper band from the summer period, has held - for now, at least. (Remember $1784, $1794, $1804... which was with us for weeks?) The reason for the weakness is simple. The US Dollar is now flashing so much strength, Gold is simply being shunned. Noteworthy is the fact that once the 1850 level gave way, we tumbled fairly quickly. In the chart below we can see several bounces off the line of $1850, but in six sessions, no closes below it. That was the sign of a market fighting to stay above a certain level. Yesterday, we went through decisively, and then ripped through the trend line (drawn below) and off we went.

In the big picture, we maintain that Gold is still fairly strong, given the roaring advance of the US Dollar, but when the market starts to fear a real US Dollar advance vs. the EURO and GBP and Yen, then the first instinct is to run for cover. That is why we have maintained the position to be long the US Dollar, and nimbly trading the Silver and Gold markets. Yesterday was one of those days where nimbleness paid off, because it let our core US Dollar long run, which covered us, and continues to make the position profitable. There are likely to be more days like this going forward, but we still maintain the bullish tenor towards Gold. It's simply that we must remember that dodging bullets is still going to be a way of life for the Metals bulls.

What now? Well, the bottom of the channel in Silver really should be bought, and so we will. Medium size, nothing outlandish, but not a mere spec. If we move decisively below the line we will have to cramble and cover it. No, the market is not trending higher now, but such is the technical level reached, that the discipline demands that we committ to it. The holding of $1804 in Gold gives us a sign that the worst, temporarily, of course, could be over.

It's been a big and rapid sell off - right to the trend line in Silver. That provides an opportunity. Length with an eye to cut if the line fails with any decisiveness. It's simply risk/reward. We're going to take it.

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