Gold and Silver have reached the top of their ranges we have written about this week. The action we expect from these levels are a pullback to their respective support of 1900 and 24.5. The congestion pattern they are in is consistent with what markets do as they wait for the strong hands to break them out.
Until Gold closes above 1960 and Silver above 26 they will remain directionless and we will stay short. There is no doubt the breakout could be higher, but probabilities suggest a pullback to support. Remember, probability is what trading is all about.
Nothing is ever guaranteed; who would believe with all the geopolitical risk, soaring inflation and a broken supply chain that Gold and Silver would be consolidating while equities push higher? This is why price action, not news, drive the markets in both directions.
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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