Last week Gold and Silver broke out above resistance and reversed to an uptrend. Both should test upper end resistance as they tested support on the way down. We are long but expect some selling pressure above before breaking out to the upside.
Gold and silver are still in the consolidation pattern which has tormented traders since the beginning of time. Eventually they will breakout and confirm a direction until then trading will continue to be challenging. History tells us they are going higher but for traders the short-term trends continue to change.
The resistance levels to watch are, Gold 2000 and Silver 26.5. Once they can move and hold above there is room for a much bigger rally. In the meantime, there is no volume and no real driving force behind a rally. Remember, markets never announce themselves but when the next move begins it will be big.
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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