The past few days gold and silver have attempted to breakout to the upside but have failed. The next logical step is a return to support, 1900 gold and 25.5 silver. The pattern suggests a test or a breakdown through those levels.
We know the market promises nothing, however the price action and the map created by the charts suggest the next move will be lower. The lack of volume and trade is a concern which should lead to a continuation lower. Although equities have tried to push higher, the rallies are weak.
There are many concerns in all markets – the potential for an equity collapse is a real possibility. Although we are long now, a sell off would be no surprise. We are witnessing a market that has gone relentlessly higher in the face of inflation, geopolitical issues, and an administration willing to give everything away.
Gold, silver, and platinum should eventually find new bottoms around 1900 before exploding higher. Trading is short term; trends can change at any time. We are short gold and silver, looking for a test of the bottoms.
Precious metals should be owned on a physical basis with capital that is not needed tomorrow or anytime soon. Trading should be done with paper knowing that we can trade either side without emotions.
In all markets price action determines what will happen in the next day, week, or months. Keep the two strategies separate, the worst trade anyone can make is turning a trade into an investment hoping for a way out. Traders must learn to take their losses and move on to the next trade.
Patience, discipline, and money management always win the day. Let the map of the markets show you the way.
Todd Horwitz Chief Strategist BubbaTrading.com
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