On Tuesday we wrote about the patterns in Gold and Silver, their action shows the same levels and more weakness. Gold and Silver feel like they are stuck in quicksand which should lead the markets lower. The inability to rally the last few days confirms weakness.
Every rally has been met with sellers; the rallies have become weaker with every passing day. Gold has been in tight consolidation indicating a big move is coming. From the consolidation pattern two things can happen, Gold will break higher creating new trend or breakout to the downside continuing the downtrend started in January.
Silver is almost identical to Gold except the downtrend began after the attempted short squeeze on February 1st. Obviously with the identical pattern as Gold we expect the same results, a breakout in either direction. Like Gold we expect lower. All markets when in consolidation eventually breakout to a trend. Based on our current positions which are short, we expect the breakout to the downside.
As traders we must remember one important thing, the market is always right, opinions seldom are. Those who cannot get past their own bias will always struggle in markets. We must let the price action decide our positions when trading.