The Bollinger Band trade we looked at two weeks ago for the precious metals and miners has come and gone. And now we are in the “what, next?” phase of the bounce taking place there.
On the updated gold ETF chart, first below, the bullish interpretation by the light blue lines is that of a bull flag before the rally continues. The bearish read by the yellow lines is that this entire bounce off recent lows is nothing more than a bearish rising channel which will ultimately resolve much lower.
Because we still have a declining 50, 100, 150, and 200-day moving average all above price, I am inclined to side with the bears here. However, I still see a decent quick trade setup whichever way it breaks–That quick trade being long GLD above $130 and short below $127; Long SLV above $19.90 and short below $19.30.
Another observation is that sentiment was quick to become quite excited with the recent bounce in the metals and miners. Even if they are truly in the bottoming process, a retest or even breach of recent lows is a distinct possibility–E.g. The October 2008-March 2009 bottoming process for equities.
Similar comments and analysis apply to the silver ETF daily chart, second below.
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Hi, Can you please share what is the quick trade setup? Is it on the long or short side for SLV or GLD? Thanks
Hi Kevin, Updated the post just now with levels for a trade.
Chess, awesome stuff. Do you mind if I ask your opinion on WNR? Bottoming process or flagging before another drop?
Woj,
Thanks…re: WNR-it could be a mini inverse head and shoulders bottom here, but I tend to think the weekly chart indicates just another bear flag. I’d be careful about bottom-picking it without a tight stop-loss.
Thanks. I was leaning the other way given the chart and the fact that the wti/brent spread is pretty much gone. Was looking at August puts.
Agree with your thinking.