Gold and Silver had sharp rallies on Thursday but in typical market fashion both failed to close above resistance. The failure was expected, and another test of those levels are expected. However, the trends will not change until they close above 2960 Gold or 26 Silver for more than 20 minutes.
Prices in both are lower this morning and could head back to support. Today’s action will go a long way towards deciding whether they will change direction and become bullish or stay short. The action is interesting, but volumes are light.
From a traders view this action is brutal; the lack of volume indicates this is a retail rally. This means that the pros and funds are sitting on the sidelines waiting for the gold and silver bulls to get in before hammering the precious metals. This is common in quiet markets.
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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