Originally published on July 15, 2021 by TraderStef at CrushTheStreet
Summer is definitely hot in a few regions of the United States this year and the potential for a heated bull-run in gold and silver is just around the corner. The pandemic era’s damage is creeping through the global landscape with asymmetric impacts that include but are not limited to pockets of steamy inflation, supply chain disruptions, jobs and unemployment, civil unrest, geopolitics, extreme sovereign debt, illegal state-induced coercion with profound censorship over exercising your right of informed consent for making evidence-based decisions about a gene-modifying experimental inoculation, and a dystopian brew of radical-left wokeness and fascism that risk a societal implosion after ongoing forensic audits surrounding the 2020 election come to fruition.
I will refrain from opining on the quagmires noted above and focus on the charts today. I suggest that you first review my most recent technical analysis charts in “Gold and Silver on a Hot Summer Road,” published on May 31, and “Price Derangement Syndrome Déjà Vu,” published on Jun. 19. To view a larger version of any chart below, right-click on it and choose your “view image” option.
Gold and Silver Futures 20-year seasonality range/location as of today…
Hardcore analysts that spend too many hours staring at charts as I do, might appreciate an anomaly that appeared in silver spot on Wednesday Jun. 30, from 2-2:45pm EDT. It did not happen simultaneously on the gold spot chart, but that does not mean it didn’t happen during the daily one-hour close before GLOBEX reopens at 6pm. If seasonality repeats this summer, we’re on the doorstep off its beginning. I shared the chart and my thoughts with two colleagues for the record.
“The (annotated as ALGOs OFF) candles adopted the automation-off routine. No real price movement, flat lined, and only a few contracts traded (likely actual humans vs. blocks of contracts that are typical of algo-driven strategies). Not a ‘manipulation’ and it said to me some algos were temporarily turned off – then everything proceeded as normal at 2:45pm. Notice how the low-price level was not violated during that time period. Educated guess is a confluence of events that include institutionals’ switching automated platforms to alternate strategies at end-of-month for summer seasonality, shortly after COMEX closed, post-June options and futures contracts closed earlier, and 2Q21 book-squaring in a variety of asset classes. The next day, Fed-speak hiccuped the markets, but that price level around the 2-2:45pm candles held as support, then a jobs report was an upside gift on Friday… Let’s see if my theory confirms near-term into summer seasonality.”
Silver Spot algo anomaly on the 1-minute chart Jun. 30, 2021…
Prior to the Great Financial Crisis, high-frequency trading (HFT), algorithms, automated and autonomous platforms were just beginning to dominate trading in financial markets. Adding artificial intelligence with machine learning has taken it to a whole new level that few may grasp, which includes futures and cash contracts on FOREX in the precious metals. Was the anomaly a silent signal that specific platforms were reprogrammed for the summer? Thus far, gains have been greater in gold than silver since the Jun. 30 close.
Gold Spot hourly chart as of July 15, 2021 7:30pm EDT…
Excerpt from the June 19 daily chart analysis:
“The most important indicator I’m keeping an eye on is the 50/200 EMA Golden Cross. Despite the fall in price, it is important that it did not reverse. The same dynamic took place in late 2018 and early 2019 before the $1,380 resistance level of 5 years was obliterated in the summer of 2019. Also note that the StochRSI is deep into oversold territory and the DMI-ADX is showing its first sign of approaching oversold status after the abrupt reversal from a bullish setup. Trade with caution until a sustained reversal and bullish pattern appears.”
The price action on the hourly chart confirms the daily chart analysis on Jun. 19, and thus far confirms my thoughts on the Jun. 30 algo anomaly that followed the $1,750 low on Jun. 29. The green lateral indicates the anomaly’s price level that printed on the 61.8% Fibonacci. A Cup ‘n Handle formed on top of the Jun. 29 low and subsequent anomaly, then an Up Channel topped out into a period of consolidation that ended with another Cup ‘n Handle. The price action is working on another Up Channel, the DMI-ADX trying to establish an Alligator Tongue set up, the StochRSI has spiked to the upside, and Volume will need to follow through this evening and tomorrow to maintain upside momentum.
Several economic reports are scheduled for release tomorrow morning that include retail sales, consumer sentiment, jobs, and unemployment data. Anything can happen when so many data points are due, so review the price action in Asia and London this evening for any hints. The chart is trending bullish, but tomorrow’s economic data could blunt the uptrend or launch a run to the next resistance at $1,860.
Silver Spot hourly chart as of July 15, 2021 7:30pm EDT…
Excerpt from the June 19 daily chart analysis:
“The silver chart fared much better than gold and a bullish Ascending Triangle remains in play.”
Price action on the hourly chart is confirming support at the anomaly price level with minor violations that are immediately bought. Following the $25.50 low on Jun. 29, a Cup ‘n Handle led to a bearish Rising Wedge, and a manufacturing report provided the fuel to fulfill that negative signal. A bullish Falling Wedge bottomed out on Jul. 9 and resumed a slow, but steady uptrend. The DMI-ADX and StochRSI signal are similar to gold and a significant buy volume boost is needed to launch the price above $26.50 and onward to $27. There will be numerous opportunities to scalp intense price action this summer.
Tomorrow’s economic data will likely impact silver and gold, so remain cautious about risking large amounts of paper capital. I suggest patience until a significant surge in Volume and price breaches $29-$30 at the Ascending Triangle’s topside lateral resistance.
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