Old friends and new guests, thank you very much for the comments and discussions regarding my post last week. One thing was clear… you prefer classic trend line charts! I will try to keep it short and simple from now and on. I will keep Elliott Wave for more liquid and crowd trending markets, like stocks and indices, where they work better.
Gold
Chart courtesy of Tradingview.com
Last week Gold was very tricky compared to the other Dollar rivals. For example, the Euro and Crude oil are creeping up, while Gold did the opposite and squeezed out buyers. Yesterday, sellers couldn't escape either and got stopped out.
The price touched the downside for the second time and Gold shaped the Descending Triangle pattern which is highlighted in red. A breakout happened today above $1200. It means that we will watch the continuation of an uptrend (highlighted in blue). The target is calculated as a sum of the breakout and the height of the Triangle, which is located at $1246 area. It coincides with the hypothetical second touch point, charted as parallel lines. If price will manage to break above the uptrend, then the next area of interest for bulls is a previous medium term high located at $1307. It’s a nice target from a profit point of view.
Currently the level is $1211. The stop should be set both below today's low at $1199, and at the breakout point at $1200 (around $1195-1197).
The risk/reward ratio is approximately 1:2.2 ($1195 vs $1246) which is healthy enough. If we pray for $1307, then it will be huge, 1:6! Bon appetite my hungry sharks!
Silver
Chart courtesy of Tradingview.com
Silver was also cruel to traders on both sides. It first went down and touched the downside, killing longs. I hope market makers don't follow my posts, which would spoil the market plan for all of us, buyers and sellers.
The market picture is still the same. Indeed, the Falling Wedge reversal pattern was disrupted yesterday and the price reversed like a rocket to a new weekly high today. The target is also unchanged from last week's post and is located at $17.10. It equals the sum of the breakout point and the height of the Wedge at the widest area.
The current level is $16.55. The Stop should be set below the break point ($15.97-16.00) around $15.90 level.
The risk/reward proportion is poor; Silver is less liquid and the price soared more than 50¢ already. 65¢ of potential gain, versus 65¢ of potential loss. This is a tricky choice. You could hunt for a medium term peak resistance located at $18.45 (January 2015), which can score you almost $2.00 versus the pain of a 65¢ stop distance (1:3).
Risk is noble, just limit it by the stops.
Intelligent trades!
Aibek Burabayev
INO.com Contributor, Metals
Disclosure: This contributor has no positions in any stocks mentioned in this article.This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
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