Gold and silver are running higher this morning and appear headed to test the top end of the range. For weeks Gold has traded between 1900-1960 and Silver 24-26; today Gold is at the top and Silver getting close. The yo-yo market continues.
We remain short gold and silver knowing that this market could breakout to the upside or resistance will fail once again. Based on volume and volatility our expectations are for these rallies to fail. However, this is what makes the consolidation pattern the hardest to trade.
There are cases to me made whether you are bullish or bearish, miners have been strong, physical has been weak. Most of the news would favor higher prices for metals but they have not broken out to the upside. The important trade here is to watch the price action. Failure would take the metals back to the bottom end of the range.
At this point the metals can go either way. Until they break above resistance, sellers should maintain control. Volume remains weak which indicates there is no power to push through, but we are watching.
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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