In yesterday's analysis, we wrote about the likely breakdown below the rising wedge pattern in the USD Index, the decline that was likely to follow, and the rally in gold and silver that was likely to emerge as a result. It all materialized in the above-mentioned way, but today's pre-market trading saw gold and silver moving lower, so you're probably wondering if the rally is already over.

In our view, it's not likely. Not yet.

First, let's take a look at the USD Index.

Is the USD Index Done Declining?

The breakdown below the very short-term rising wedge pattern resulted in a major decline. "Major" from the very short-term point of view as it's been the biggest daily decline that we saw this month. Apart from that, it was not very significant. The USDX closed right at its 50-day moving average without breaking below it, which is probably why the decline wasn't deeper. The 50-day MA has been providing support quite reliably in the previous months. It was not always strong support, but often meaningful enough to make it useful as a trading tool. It stopped the decline yesterday, but we continue to think that the index will still move lower, just as it did in two previous cases this year.

The green and blue dashed lines represent declines that are similar to the October decline. The rallies that followed them were quite sharp, but they too had smaller pauses within them. Both: March-April, and July rallies consolidated after the USDX moved above its 50-day moving average.

The short-term decline that we saw so far is too little compared to what we saw in early April and in mid-June. Consequently, the odds are that the USD Index will decline some more before soaring to new highs.

This means that gold is likely to move higher before plunging.

• If that's so, then why did gold decline in overnight trading?

No market can move up or down in a straight line and it's true not only in case of the big, long- or medium-term moves, but also in case of the immediate-term price swings. Gold corrected to its 38.2% Fibonacci retracement level after a 2-day rally, then it bounced and went on to decline a bit more. That's relatively normal and nothing to be concerned about. The very short-term outlook remains bullish. If gold breaks below the 61.8% Fibonacci retracement level ($1457), the above might change, but that's not the case so far.

Do you recall the early-November turnaround, and in particular, what clearly indicated it? It was the triple reversal based on the triangle-vertex-reversal approach. This useful technique is providing us with new indications for the next few weeks, and knowing them in advance provides a substantial edge over other investors. We will keep these timely details (as well as profit-take levels for the current profitable trading position in gold, silver, and miners) to our subscribers. Please note that you can still join them at less than tenth of its regular value - the details are just $9 bucks and a few minutes away. Thanks to the overnight correction, you just got an extra chance to enter the long trade at relatively low prices - don't waste it.

• Read more

In yesterday's analysis, we emphasized that the short-term outlook for the precious metals sector became bullish, and we discussed the silver market in great detail. Both: gold and silver are now higher than they were when we posted yesterday's analysis, which means that taking profits off the table in case of the previous short position was likely a good idea. Since we provided a lot of silver details yesterday, in today's analysis, we'll put greater emphasis on what's happening in the rest of the precious metals sector. In particular, we'll look at the short-term developments in the mining stocks. But first, let's take a look at the very specific chart pattern that we have on the USD Index chart.

Spotlight on the USD Index

In yesterday's Alert, we commented on the USDX in the following way:

Besides, it appears that the USD Index needs a breather as well.

Why? Because it just formed a bearish shooting star candlestick - one of the common reversal patterns. The green and blue dashed lines represent declines that are similar to the October decline. The rallies that followed them were quite sharp, but they too had smaller pauses within them. Both: March-April, and July rallies consolidated after the USDX moved above its 50-day moving average. This happened recently and the reversal shooing star suggests that the time for the corrective downswing is here.

At the same time, it seems that we are seeing a quick shift in the gold-USD dynamics. Gold recently managed to decline regardless of USD's daily show of strength or weakness, but this seems to be changing today. The USDX is up by less than 0.1%, which should theoretically make gold drop at least somewhat. Instead, gold is more than 0.5% higher so far today.

Both: USD's possible short-term decline, and the temporary change in the gold-USD link point to higher gold prices in the near term (perhaps until the end of the month or so).

The bullish implications of the gold-USD link clearly remain intact. Gold moved higher yesterday, even though the USDX ended the session slightly higher. Gold is clearly showing that it wants to move higher in the next few days.

Since the USDX didn't decline after the shooting star reversal, didn't it just show strength? Not necessarily. You see, it didn't soar either. Instead, it continued to trade back and forth in an increasingly tight trading range, thus creating a rising wedge pattern. You can see it more clearly on the below 4-hour chart.

If rising wedge patterns are broken to the downside, they are likely to result in quite sharp declines. This means that while we think the USD Index is going to rally to much higher levels in the following months, it seems that it could move sharply lower in the short run.

Given gold's recent very short-term (and very short-term only) resilience, the above is likely to translate to a sizable short-term rally in the yellow metal.

The Short-Term in PMs

The most important thing about the above chart is that it shows that miners' strength didn't disappear. Conversely, even though they corrected some of their gains before the session ended, miners have moved much higher than either gold or silver did on a relative basis. By relative, we mean compared to the November decline. Gold and silver were barely up, but miners temporarily erased about half of the decline.

Both metals are higher in today's pre-market trading (above yesterday's highs, meaning that everyone who got aboard with our long position is already profitable) which suggests that mining stocks will rally once again today.

Gold and silver were rather reluctant to rally more profoundly yesterday because they just verified breakdowns below the previous support levels and the latter turned into resistance. And they would have likely managed to get back above these levels - if they received help from the USD Index. But they didn't - at least so far. Given the big number of news releases that we're going to get today and tomorrow, it's quite likely that one - or a combination of them - will serve as a trigger for the moves that technicals predicted beforehand.

Our subscribers' profits are growing - this time thanks to a fresh new long position in gold, silver and mining stocks. Would you like to join them and quickly get all the profit-take levels (we aim to catch the easiest part of the move)? All it takes is 9 bucks and a less than a few minutes of your time - gold and silver are already up today - position yourself to profit before the move is over.

• Read more

Yes, you read that right. Despite all the bearish developments that we described in the previous analyses, and despite myriads of bearish factors that remain in place for the following months, it seems that the white metal is about to rally. Gold, and mining stocks could move higher as well, and we'll move to that shortly. For now, let's talk silver.

(click the above chart to enlarge it)

In particular, we're going to discuss the SLV ETF. This ETF has one big advantage over silver futures chart that we feature regularly. It puts emphasis on price gaps and shows only that trading which took place when the U.S. market was open. This distinction can be helpful in determining support and resistance levels as price gaps tend to provide such. In fact, the late-September bottom formed once silver touched the upper border of its price gap.

The SLV was attempting to break below the lower border of the gap and it has failed to do so three times. This serves as an indication that the white metal is not yet ready to break lower. The price gap on its own would not be strong enough to make the short-term silver outlook bullish all by itself, but that's not the only thing that's pointing to higher silver prices in the near term.

The RSI indicator (upper part of the chart) is close to 30, and that's when silver's short-term rallies used to start.

More interestingly, the Stochastic indicator just moved to levels that are low enough to indicate a short-term buying opportunity on their own. This simple technique worked very well in the previous 12 months. Almost exactly 1 year ago it confirmed a medium-term bottom, in early March it indicated a short-term buying opportunity, and in mid-May it was very close to pinpointing the exact bottom before the mid-year rally. We saw Stochastic close to the buy line also at the end of September, which doesn't really count as a true bullish signal, but silver moved higher nonetheless. So, we have three out of three efficiency with a little bonus confirmation from about 1.5 months ago. While this doesn't make a short-term rally inevitable, it does make it quite likely.

And now for the final silver sign - the time. Silver tends to move in a very specific way. It moves very fast for a few days, only to act very calm in the next several days. Some might say that it's similar to how spiders move in terms of seconds. Personally, we find the silver view much more appealing... What does this have to do with the chance for a short-term upswing in silver? Quite a lot.

Silver already lost its downward momentum as its been calm for a few days now. This characteristic pattern is what we saw also when silver completed a broad top (just as it did recently) earlier this year. In early March, the fourth day of the calm after the storm, was actually a local bottom that was followed by a rally to the 50% Fibonacci retracement. Not a ground-breaking rally, but definitely something one would prefer to ride on the long side of the market rather than being short.

Just as one swallow doesn't make a summer, one analogy to the previous decline isn't necessary meaningful. But that was not the only case. Silver declined in a very similar manner after the 2016 rally.

(click on the chart to enlarge it)

As you can see, silver losing its downward momentum after a volatile decline was how practically all bottoms of the late-2016 decline formed. We saw the same thing in case of the first two important bottoms of 2017.

The silver seasonality also suggests that the short-term decline in the white metal might be over or close to being over as local bottoms tend to form close to the middle of November.

What does it all come to? It means that - as far as the next week or two are concerned - the outlook for silver just became bullish. In fact, we just wrote to our subscribers that we're taking profits off the table in case of the short positions and in today's Gold & Silver Trading Alert, we clearly outlined the details of making money on the upcoming upswing. These details cover positions in gold, silver, UGLD, USLV, GDX, NUGT, and JNUG. And they can all be yours for just $9 as that's how little it takes to subscribe for the first 3 weeks. Subscribe and grab this opportunity while you can.

• Read more

Our summary of the current situation in the precious metals is not going to differ much from what we wrote yesterday, and the reason is simple. The decline in gold, silver, and miners is developing just as we've been expecting it to. Most importantly, gold has just confirmed its breakdown and everything that we reported on gold's outlook and price targets just got a huge confirmation.

Let's take a look at what gold, silver, and mining stocks did in the last couple of days.

The Recent Days in PMs

Gold broke below the lowest closing price of September and it just verified this breakdown by closing below it for three consecutive trading days, and that includes the weekly close too. That's a clear way for gold to say that a relatively broad top has been formed and that lower prices are going to follow.

Silver broke not only below its September low, but also below its rising red support line and the 50% Fibonacci retracement level. Technically, silver's breakdown was even more important than the one in gold. The fact that the white metal managed to close the week below the combination of three support levels is bearish, but it will become much more so only after it's verified.

• So, isn't it best to wait for the breakdown in silver to be confirmed, before aiming to profit on the decline?

That's one way to do it, and if anyone wants to take this route - sure, it's their capital. We think that having a position open right now is better from the risk to reward point of view because of the confirmed breakdown in gold, and because of multiple signs that we have covered in our previous analyses, and that we can't discuss on each day - there's simply not enough space and time to again go through all the bearish factors that remain in place right now.

It is usually the case that three consecutive closes below a certain level are necessary for the market to verify the breakdown, but given how strongly correlated gold and silver are, the odds are that a slide in gold will trigger a powerful slide in silver as well. And gold's plunge could start any day, hour, or minute.

• Ok, but what about the miners' strength? They just moved higher yesterday, even though gold didn't.

That's true, but it's also true that they did the very same thing just several days ago, during the previous pause. On November 5^th and 6^th, miners moved higher on an intraday basis even though gold rallied only once in intraday terms. Moreover, November 5^th - the first of the small, two-day, corrective upswing - was the day when the HUI opened lower but then moved up during the day. That's exactly what happened on Friday - the first day of the current, two-day, corrective upswing.

Given the above similarity and the very bearish follow-up that we saw on November 7^th (big plunge across the precious metals' board), it's hard to view miners' performance as bullish. Besides, if the miners are really showing strength here and the decline in gold and silver continues today, then the former will easily repeat their supposedly bullish signal, indicating a local bottom. At this time, such a scenario seems doubtful.

The gold market has been declining just as we expected it to and it's likely to decline some more before we see a bigger turnaround. Knowing when to exit a short position and when to enter a long one is the essential part of making money on this move. They say that the universe does not reward one for what they know, but for what they do with it. The clear price targets and profit-take details for gold, silver, and miners included in the full version of today's analysis - our Gold & Silver Trading Alert - are the actionable part that savvy traders really should take into account right now. We invite you to join us at extremely preferential terms - the first 3 weeks of your new subscription are now discounted to mere $9! Subscribe today, while this offer is still available.

• Read more

Gold plunged last week just as we've been describing it. We wrote that the triple (in gold, silver, and miners) vertex-based reversal after a short-term rally was a very bearish development and indeed, that was the top after which the PMs plunged. Both key precious metals ended the previous week significantly lower and - most importantly - they closed below their lowest closing prices of September. This means one thing: major breakdowns. And major breakdowns mean major declines just around the corner.

• Ok, if that's the case, then why are gold and silver moving higher today?

No market can move up or down in a straight line without periodic corrections or breathers (particularly short corrections). It seems that we're seeing one in gold and one in silver. Of course, such corrections can turn into big rallies, but nothing that we saw so far today indicates that this would be the case right now.

Why?

The Perspective of Gold's Rally

Because the key support lines remain intact. Both: gold and silver moved a bit higher today, but they didn't even touch the levels of their September lows, let alone break above them.

On Thursday, gold declined below the lowest closing price that we saw since early August -with the most visible sign that something major happened being that it closed below the September low in terms of closing prices. The key thing happened on Friday, though.

Actually, the most important is what didn't happen. Gold didn't invalidate the above-mentioned breakdown. It moved lower just a bit, but - after an intraday attempt to rally - it closed once again below the lowest closing price of September. Some may report gold's breakdown as verified, but based on our experience in the precious metals market, it's best to wait for three subsequent closes before saying that a breakout or breakdown is truly confirmed. So, gold's breakdown was not invalidated, and it's almost confirmed right now.

At the moment of writing these words, gold is trading about $5 below the September low, which means that the breakdown was not invalidated. Even if gold moves temporarily above it, but still closes at or below the September low, the breakdown will not be invalidated - after all, the breakdown is based on the closing prices, so it's confirmation or invalidation will also take place in these terms.

This means that the September low is likely to provide short-term resistance and if this resistance holds (which is likely), it will open the way for further declines - likely to one of our near-term price targets for the yellow metal.

Silver's Turn Now

And what about silver? It broke and closed below the lowest closing prices of September on Friday, so today is the second trading day when it's trading below it. The implications of today's close will not be as severe as they will be in case of gold's close, but the September low is still likely to provide important short-term resistance.

Let's keep in mind that silver did more than just break below the lowest closing price of September.

Silver also broke below the rising red support line and the 50% Fibonacci retracement level. Technically, silver's breakdown was even more important than the one in gold. The fact that the white metal managed to close the week below the combination of three support levels is bearish, but it will become much more so only after it's verified.

• So, isn't it best to wait for the breakdown in silver to be confirmed, before aiming to profit on the decline?

That's one way to do it, and if anyone wants to take this route - sure, it's their capital. We think that having a position open right now is better from the risk to reward point of view because of the almost-confirmed breakdown in gold, and because of multiple signs that we have covered in our previous analyses and that we can't discuss on each day - there's simply not enough space and time to again go through all the bearish factors that remain in place right now.

It is usually the case that three consecutive closes below a certain level are necessary for the market to verify the breakdown, but given how strongly correlated gold and silver are, the odds are that a slide in gold will trigger a powerful slide in silver as well. And gold's plunge could start any day, hour, or minute.

We hope you enjoyed reading the above free analysis, and we encourage you to examine today's Gold & Silver Trading Alert - this analysis' full version. We supplement the above with two specific target areas for gold that could be reached this month (perhaps even this week) or in December. Additionally, the full version includes links to the detailed discussions of key factors that make the current outlook for gold so bearish. Of course, we provide target prices not only for gold, but also for silver, mining stocks, and related (leveraged) ETFs. Please keep in mind that during the current promotion, the first 3 weeks of your new subscription go for measly $9 (renews normally, but you can cancel anytime). Get the critical details as well as full 3 weeks of follow-ups - subscribe today!

• Read more