Originally published on Mar. 31, 2022 by TraderStef at CrushTheStreet
The technical analysis in “Gold and Silver Rise in the Fog of War” Part 1 and 2 were a slam-dunk despite the ire of retail plebes or pundits that recirculate outdated narratives that are riddled with fear of suppression. All that’s audible when the price of gold and silver spike through resistance is crickets from the bleacher seats, but when the inevitable Throwback occurs with a healthy breather and consolidation that builds solid support for the next leg higher, whining pierces the eyes and ears.
Welcome to high-frequency trading (HFT), automated trading platforms, algorithms, and the realm of artificial intelligence. The machines never sleep no matter which direction the market is dancing. They dine on media headlines, machine learning, and basic technical analysis, as open-cry trading and futures pits shuttered their doors forever. Automated trading now accounts for roughly 85-95% of all executions on financial exchanges. Your broker, trading platform, or opinion of what the price should or should not be is irrelevant to the discovery process and the price you buy or sell at.
Trade Automation’s Long Road – Traders Magazine, Apr. 1, 2022
Today’s focus is the gold and silver monthly chart analysis to wrap up the price action for March. There will be no suppression debate, as I opined extensively about manipulation trojan horses in Jan. 2019 through Jun. 2021, and that series was littered with Twitter trolls from demonic trees in their forest. If you’ve been hoodwinked by false claims that the COMEX Futures are a delivery mechanism, want to explore rabbit holes, or still believe Toto will discover an institutional wizard behind the curtain, have at it with nine archived articles in chronological order (1, 2, 3, 4, 5, 6, 7, 8, 9) and the Déjà vu interview. Another missive on topic that I highly recommend “Is the Gold Price Suppressed on the COMEX Futures Exchange?” by Jan Nieuwenhuijs’s Gold Observer from Dec. 2021, and Keith Weiner’s two cents from 2017 at Monetary Metals in a “Thoughtful Disagreement with Ted Butler.”
To view a larger version of either chart below, right-click on it and choose your “view image” option.
Gold Spot monthly chart as of Mar. 31, 2022 close…
Excerpt from the Feb. 11, 2022 weekly gold chart analysis:
“Since the Aug. 2021 low of $1,680, gold rallied to $1,877 in November and retreated to $1,752 in mid-December, then surged to a high of $1,865 and closed at $1,858 this past Friday on concerns that Putin gave the go ahead for his military to move into Ukraine in mid-February or March. Gold’s technical indicators and studies are a mixed bag, but signals are leaning more bullish than they were in December… Gold is not out of the woods and the chart is ripe for scalping intraday sweet spots. It’s prudent to be patient for a decisive break through $1,980 before layering in large paper positions for swing trades.”
Excerpt from the Mar. 4, 2022 weekly gold chart analysis:
“The Symmetrical Triangle pattern on the weekly chart with lower highs since June 2021 and higher lows since August was left in the dust since mid-February. There is still a chance for a Throwback that will test the Symmetrical Triangle’s topside trendline, Fibonacci levels above it, and $1,900 to confirm solid support before challenging the all-time high of $2,075. Take note of the Swiss Stair pattern (mid-February) on the hourly chart that provided support during price volatility… As expected since the fall of 2020, $1,980 is an important resistance level to penetrate… Gold is not completely out of the woods but is making powerful progress, and the chart is bullish. The chart is ripe for scalping intraday sweet spots, and caution is warranted until $1,980 is left in the dust before risking large paper positions for a swing trade.”
First, let’s address what happened at the London Metals Exchange (LME) on Mar. 8-9. Gold was challenging its $2,075 all-time-high during the same trading session.
- LME nickel trading halted as big short hits big trouble – Reuters, Mar. 8
- LME Sees Trader Exodus as Open Interest Slide – Bloomberg, Mar. 25
- LME to Nearly Double Its Default Fund After Nickel Squeeze – Bloomberg, Mar. 25
Excerpts: “When nickel prices spiked 250% in two days earlier this month, several brokers on the LME were brought to the brink of failure before the exchange intervened to close the market… To be sure, the trend isn’t limited to the LME, and there are signs of mass liquidation across commodities markets amid roiling price moves and severe constraints on financing. But traders and brokers with exposure to other markets say the aversion to trading on the LME has been heightened by its handling of the mayhem in nickel… Traders and banks have already been hit with surging margin calls due to the dramatic prices moves in metals and other commodities since Russia’s invasion of Ukraine.”
Whether a market sell-off triggers your everyday Throwback or a major crisis sends shockwaves across multiple time zones, the carnage must resolve itself as each exchange opens with positions held in a complex and interactive global market that has multiple layers of counterparty risk. The big scare is when margin calls surface among large institutionals and small speculators. When big pockets need a lot of cash in a hurry, it’s well known that gold is one of the most liquid markets on the planet and paper gold takes a hit. One standout example is the brief sell-off in gold during the Great Financial Crisis. Obviously, a lot of margin calls were launched from the LME on Mar. 8-9 of this year. Paper gold was sold for liquidity needs in other areas as gold spot was tapping on the door of $2,075. Selling begets selling (buying begets buying) through time zones and technical levels are triggered by automated bots. Eventually, momentum exhausts itself and wise money begins to layer into buying the dips, which in turn creates another solid base for the price action to regain its footing and move forward. No conspiracies, just the basics and market dynamics.
Gold had a solid $400 run after a Double Bottom printed in Aug. 2021, which included a Christmas rally that solidified a base, followed by seasonal buying for India’s wedding season, and fears of war as Russia increased its military presence on Ukraine’s border launched a volatile $300 rally from February through March. When the LME issues with nickel made headlines, gold had challenged the all-time-high of $2,075 with a $2,070 print. The breakout from $1,980 lasted no longer than 24 hours before the selling kicked in and took away any chance of attaining a “left in the dust” category. The monthly candlestick for March ended as a bearish Plunger Candle (aka Shooting Star) with a $1,890 low and closed today at $1,937.
Due to the accelerated price spike that tapped an all-time-high area, the chart has developed a bullish Big-W double bottom pattern. As noted in the Mar. 4 analysis, the Throwback could revisit the topside trendline of the Symmetrical Triangle. As the days tick away, that trendline trends downward and is currently at $1,850. Don’t be surprised if it has a visit and is probed for support. Precious metals are currently in spring seasonality and the price action is typically choppy until the next rally in late spring or early summer.
The DMI-ADX remains in a bullish power trend that originated with an Alligator Tongue setup at the $1,380 breakout in Jun. 2019, the StochRSI is trending upward and starting a move into overbought territory, and buy Volume is solidly higher. News headlines generated about the Ukraine war are having noticeable impacts on the intraday price action. Despite the pullback, the monthly chart outlook is bullish. Don’t dismiss the fact that higher prices beget larger price swings and monthly chart indicators shift at a much slower pace than shorter time frame candlesticks. The chart is ripe for scalping intraday sweet spots in April, but caution is warranted until $1,980 is left in the dust before risking large paper positions for swing trades.
Silver Spot monthly chart as of Mar. 31, 2022 close…
Excerpt from the Feb. 11, 2022 weekly silver chart analysis:
“The silver price is volatile and choppy since printing a $21.42 low in Sep. 2021 and $21.41 in early December. A high of $24.70 was made in mid-January that was followed by a dip to $22 during the first week of February. Silver rallied alongside gold on concerns over Russia and Ukraine with a high of $23.71 and closed on Friday at $23.47… Topside resistance remains at $23 until the 50 EMA is left in the dust, then $25.70, $29, and $30.”
Excerpt from the Mar. 4, 2022 weekly silver chart analysis:
“The silver price is making progress but isn’t as bullish as gold. It peeped its head above the Down Channel’s topside trendline as the price action was halted at the 23.6% Fibonacci and $25.70 lateral resistance… There is intermittent resistance between $25.70 and $29 but nothing substantial if the upward trend continues with a decisive spike in buy Volume… Silver is not out of the woods, and the chart is ripe for scalping intraday sweet spots. $25.70 is the last substantial resistance to conquer before $29 and $30 are challenged for all the marbles. Caution is warranted before layering in large paper positions for swing trades until $29 and $30 are left in the dust.”
In the month of March, silver printed a high of $26.93 on Mar. 8, a low of $23.95 on Mar. 29, and closed today at $24.77. Silver also printed a Plunger Candle, but the price action closed above its breakout from the Down Channel’s topside trendline. It’s worth repeating that the $21.49 Fibonacci has maintained its role as a support level through all the volatility since the Jul. 2020 breakout and Aug. 2020 high. It deserves a gold star for performance.
The DMI-ADX is struggling to maintain an Alligator Tongue power trend setup, the StochRSI is trending upwards, and the buy Volume is solid. Despite the pullback and close below $25.70, silver remains in the bullish camp as long as $21.49 support holds firm. The chart is ripe for intraday sweet spot scalps in April, but caution is warranted before layering in large paper positions for swing trades until $29 and $30 are left in the dust.
A Global Liquidity Crisis with Massive Food Shortages Is Coming Warns Jim Rickards – Stansberry Research, Mar. 25
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