Gold and Silver Are Not Out of the Woods – Workshop Technical Analysis

Gold and Silver Are Not Out of the Woods – Workshop Technical Analysis

Originally published on Oct. 22, 2021 by TraderStef at CrushTheStreet

The financial media, monetary policy lords, and global stock markets are now interconnected at a level that goes far beyond anything it once was. You cannot rely on and act on information the way you could in years past. A major shift occurred over the last two decades in how data is disseminated, collected, and executed in relation to the price action you witness on equity indices and individual stock charts. With the advent of the Internet, wireless broadband, supercomputing, machine learning, algorithms, artificial intelligence, and automated trading platforms, the variables that a trader must consider are akin to the crossfire from a crew of street thugs trying to jump the line. Rifle or revolver?

When a lawyer considers a complex legal case, the path of execution is typically focused on the one charge that is as bulletproof as possible instead of exposing their defense or offense to unnecessary risk. Modern Air Force pilots may have earned a pilot license by flying a small plane, but they probably spend innumerable hours in simulated cockpits prior to flying billion-dollar fighter jets. When my dad taught me how to drive his car, we spent many hours in a large parking lot before risking his wheels on a local road or interstate highway to an inexperienced driver.

To acquire the skill, strategy, and confidence to effectively trade in today’s environment, it is necessary to become intimately familiar with “market conditions and price action with proven methods to execute low-risk entries.” That same formula applies to intraday scalps, multi-day swings, or laddering multiple positions into a longer-term investment. The repetition of a specific strategy with a favored set of indicators, studies, and a candlestick chart is a slam-dunk method. After a level of confidence is achieved through repetition of your paper trading, the fear of transition into risking real capital is minimized without a need for training wheels.

Without going into specifics, I present you with one example of a sweet-spot scalp from the trading workshop. The underlying methodology applies to all asset classes. You can “Crush The Street” if you have a genuine desire to learn from the ground up. The most difficult variables are shunning emotions and having the patience to allow a trade to come to you. The following screenshot is today’s gold spot 3-minute candlestick chart that highlights a 25-minute scalp after the 8:20 AM COMEX open that was executed by laddering two positions for a total of 75 contracts and netted a profit of $32k on the exit. It’s textbook stuff; keep it simple and use a revolver.

TraderStef Twitter Gold COMEX Buying Oct. 22, 2021 829am Sweet Spot Scalp Setup

Let’s go to the gold and silver weekly chart. Consider reviewing “No Summer Rally or Bears in Gold and Silver” published on Aug. 31 before continuing. To view a larger version of either chart below, right-click on it and choose your “view image” option.

Gold Spot weekly chart as of Oct. 22, 2021 at 5 PM EDT…

Excerpt from the Aug. 31 monthly gold chart analysis:

“The chart is bullish and remains ripe for scalping sweet spots. I’ve warned since last September to not risk large paper capital positions until $1,980 is taken out decisively on large buying Volume.” 

As seen in the previous chart above, today’s price action had a sweet-spot scalping opportunity shortly after the COMEX opened. That party ended when a speech by the Fed’s Jay Powell populated headlines at around 11 AM with taper talk. The mindless algos read them as bearish and executed a $30 plunge through automated stops and wiped out the early morning gains.

Jay Powell Taper Talk Headline Aug. 22, 2021

The dominant feature on today’s weekly gold chart is the topside trendline drawn down from the Aug. 2020 high. The price action has been constructive and continues to consolidate after the Eve & Adam Double Bottom, and the bullish Hammer Candle at Adam’s low printed a large $80 tail. That tail is indicative of strong dip-buying off the Fibonacci confluence around $1,680. Conversely, strong resistance since mid-summer is obvious at the $1,830 level and is another Fibonacci confluence.

The 10, 21, and 50 Exponential Moving Average (EMA) are stuck together around today’s close at $1,791, and the lows are riding upward along the 100 EMA since March. The DMI-ADX is not set up for an Alligator Tongue upside power trend, the StochRSI is showing some early signs of trending upward after an extended stay in oversold territory, Momentum remains indecisive, and Volume is unremarkable but steady.

The chart remains bullish if the consolidation continues and is ripe for scalping sweet spots. Pay particular attention to the overhead $1,830 resistance area for any breach on decisive buy volume that carries the price action through the topside trendline. Downside support is significant at $1,680.

Silver Spot weekly chart as of Oct. 22, 2021 at 5 PM EDT…

Excerpt from the Aug. 31 monthly silver chart analysis:

“The chart is bullish and remains ripe for scalping sweet spots. I’ve warned since last September to not risk large paper capital positions until $29 and $30 are taken out decisively on large buying volume.”

The chop and consolidation pattern in silver continues within a High ‘n Tight Flag since Aug. 2020. That flag is getting long in the tooth and will morph into something else unless $30 is taken out sooner than later. Take note that the flag’s lower trendline is support and it sits upon the Fibonacci $21.49 lateral breakout since July 2020 with seven years of chop and consolidation beneath it. A Descending Broadening Wedge developed throughout this past summer, and its topside trendline was finally breached this week. A confluence of the 21 and 50 EMA is resting on today’s closing price at $24.28.

The lower studies are nearly identical to the gold chart, with the exception of silver’s volume looking pathetic at the moment. The chart is ripe for scalping sweet spots in the near term due to the breakout above this week’s Descending Broadening Wedge’s topside trendline. If the 50 EMA is taken out with conviction, expect a quick sprint to $26 in the near term. Any longer-term analysis is a moot point until $29 and $30 are taken out.

Neither gold nor silver are anywhere near out of the woods, but there’s hope.

Clint Eastwood – A Fistful of Dollars (1964)

Plan Your Trade, Trade Your Plan

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Headline Collage Art by TraderStef

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