Gold and silver have just failed and key resistance levels, which took all momentum away from the metals. Based on the price action at the time, this is a colossal failure and could lead to a run to the recent lows. The price action suddenly switched from strong to weak.
Many are once again blaming the manipulators which is laughable; they obviously don’t understand how price discovery works. While the markets were flying higher looking to go to all time highs in gold and near-term highs in silver, we warned that the volume was the only problem. Volume is still not great, but it dominates the volume that pushed them higher.
Once again, we were a little whipsawed with our entry at 1973 Gold and a little worse in silver with our entry 25.60. However, trading is not only about making money but excepting losses and trying to minimize them. We have reversed to short gold and silver this morning. Platinum continues to be dead weight.
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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