FX_IDC:XAUUSD   Gold Spot / U.S. Dollar



( It doesn’t, however, mean that we won’t adjust (limit, close or even reverse) the position before this price level is reached. If we get enough confirmations other than gold’s price level itself (for instance, mining stocks show strength and silver reaches a very important support level, while the USD reaches a key resistance), then we might do it, just like we’ve done previously (which ultimately caused the short position to be more profitable).

At the moment of writing this article/idea our full net short position in gold -0.14% , silver -0.06% and mining stocks is well justified from the measurement of risk and reward
The precious metals market reversed and declined just as we’d been expecting it to and this year’s profits from the short positions have further increased. It seems that the best is yet to come, though.

Today’s alert is going to be rather short as basically everything that we have written so far this week remains up-to-date and the most recent price performance of gold, silver and mining stocks confirms it. They all declined yesterday and are moving lower in today’s pre-market trading as well.

Gold declined substantially and erased the previous several days in just one day. At the same time, gold closed below its 50-day moving average and the early-March high. Both are bearish developments and the sell signal from the Stochastic indicator serves as a confirmation.

The price of silver declined as well and yesterday’s closing price was the second lowest that we saw this month. The analogy to silver’s price performance in late November 2017 remains intact and so do our comments on it:

The particularly noteworthy thing on the white metal’s chart is the way in which we can view the self-similar pattern between now and back in November 2017. After the early-March volatile daily upswing, we thought that it was a direct analogy to the mid-November upswing that had been the final rally before the decline. And this might have been the case but based on the fundamental news (Powell-related-uncertainty and trade conflict) gold rallied and thus silver more or less had to rally as well. Consequently, the pattern changed, but not completely. The pattern still seems to be intact, but in a slightly different way.

You see, there were actually three smaller tops in October and November 2017 before silver started to slide – if we count the early-November high as well. The early-March high was the second top and we’re seeing the third – and most likely final – top right now. In fact, it seems that we already saw it this week. Silver moved above the 50-day moving average and once again invalidated this move almost instantly. It’s moving lower also during today’s pre-market trading.

In yesterday’s alert, we wrote that silver was not the only market that featured a self-similar pattern. There was also one in gold stocks. We wrote the following:

In the case of the HUI Index, the thing that we see is a similarity between the current consolidation and the consolidation that we saw in November 2017, which confirms the analogy in the silver market.

Back in late October 2017, gold miners broke below the rising support line that’s based on the late 2016 bottom and one of the 2017 bottoms. In February 2018, gold miners broke below the rising support line that’s based on the late 2016 bottom and another 2017 bottom.

(…) in both cases after the initial rally and move back above the rising support line, the HUI declined once again and formed a new short-term low. Then we saw another rally, more or less to the previous high, and a subsequent decline. That’s the action that we saw most recently and that’s exactly what preceded the bigger decline in early December 2017. Naturally, the implications of this self-similar pattern are bearish.

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