Precious metals ready to break

Gold and Silver look set to break sharply within the next day or two. The price action is approaching the apex of a multi-week wedge/bearish pennant, and a break/snap is very probable. As ever, the key issue is which direction. Best guess is... to the downside.


SLV, 60min

SLV, daily

Summary

*GLD/Gold charts not included today, but they look almost identical.
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I'm guessing SLV breaks to the downside, for a final fifth wave lower -as part of a giant bull flag that stretches back to the highs from last September, before a massive move higher into the late spring to around 38/40.

stop levels - for the serious money, are very clear though.

If however, SLV breaks into the 32s in the next few days, then the downside can be declared over..and the major move higher..will have begun.

Moderate weekly gains for the metals

The precious metals saw moderate gains across the week. Considering the gains in the main equity indexes, and the continued weakness in the US dollar, Gold and Silver are arguably under-performing. It would still seem a fifth wave lower is due in the coming few weeks, before a major wave higher into the early summer.


GLD, weekly2, rainbow

SLV, weekly2, rainbow

Summary

We can see what are clear bull flags - stretching back from the Sept'2012 highs.

A break over the upper channel will confirm the flag, and I'd expect this to occur no later than March.

First though, I'm still seeking a final fifth wave lower - see SLV chart for a rough count of what I'm expecting.


Targets for late spring/early summer 2013

SLV downside to 29, possible 27s..before a major move higher to 38/40
GLD, downside to 157/154..before a major move higher to 180/185

Metals higher..but fail to clear resistance

Gold and Silver both closed moderately higher, but we saw a very clear reaction at resistance of the declining upper channel/trend. With Gold putting in a black warning/fail candle, it would appear we will see renewed downside into the weekend.


GLD, daily

SLV, daily

Summary

The FOMC announcement earlier certainly did help to give the metals a little kick higher, but it did not last more than an hour..and both metals closed off their highs.


Downside targets

GLD - the big 158 level will be VERY strong resistance, but if the main market does retrace to sp'1460/50..with VIX 17/18...perhaps we'll see GLD 156/54 later next week.

I do not expect a break <154..anytime soon.

SLV, - the 28.50 level will be key...and if we see this fail to hold, then a brief move into the 27s is viable. That sure would give the gold/silver bugs a good scare, and wash out just about all of the weaker (trading) hands.

There is extremely strong rising support for SLV around 27.50/25. I would guess we will not break into the 26s this spring.
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With continued QE - via 40bn MBS and 45bn t-bond buying, there is an awful lot of new 'free money' out there, and it would still seem both equity AND commodity markets will be lifted higher into the spring and early summer.