Like magic, gold and silver have pulled back to their key support levels of 1900 and 24.5. They are once again at the moment of truth leaving two options: breakdown or rally again. The trend is lower, the pattern is ugly, but the pattern is being tested.
As the futures start to roll to June for gold and soon July for silver, the support levels will rise slightly on the premium. However, the pattern itself will not. With a lower trend and selling pressure on metals, the probability is a break below support.
For all the reasons you believe that gold and silver should go higher, there are more that suggest they go lower. We know the market guarantees nothing, but the probabilities normally play out. Until further notice the trend is down, gold and silver should struggle. The next few days will tell the story, breakout or breakdown.
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
Stop being a prophet and make profits
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