I spotted hot trading opportunities for you on daily charts, so let’s skip straight to it. Gold will be the first.
Chart courtesy of tradingview.com
Gold got stuck in a sideways consolidation after it hit a new high of $1748 in the middle of April. The lower peaks and higher troughs shaped a very familiar pattern of a contracting triangle (orange trendlines). The price has reached the upper side of that pattern as I write this post. Watch the price to break up out of the triangle to confirm the move up.
To find the target, I highlighted the earlier move up preceding the current triangular consolidation as the AB segment (blue) and measured it. Then I add that segment to the upside from the most recent low of $1682 to build the second CD segment with two possible targets. The first target is located at the equal distance of the AB segment at $1864. The extended target is set at the 1.272x length of the AB segment at $1913, which is just shy of the all-time high at $1921. All targets are inside the green uptrend channel. It could book 8-12% of the profit from the current level.
The RSI has been relaxing with this triangular consolidation towards the crucial 50 level from the peak. It bounced right off that support, and now it is moving up to the orange trendline resistance. It will confirm the breakout, making the double breakup both on the chart and on the RSI sub-chart.
In my opinion, the all-time high should be retested as the structures usually unfold tagging the former extremes when 61.8-78.6% Fibonacci retracement levels are passed. There are no barriers left between the mentioned resistance and the full retracement (100%).
Loading ...Let’s move on to the silver daily chart.
Chart courtesy of tradingview.com
This time silver is leading as it already has the confirmation on the chart. The structure is almost the same as gold and silver peaked at the same time in the middle of April. The consolidation pattern here has a steeper upside as it shaped the same triangular pattern (orange trendlines). As I write this post, the price is breaking above the upper trendline, let’s see if it can close the day (Friday) above the pattern.
The overall structure on the silver chart is simpler as we got the first move up from $11.64, which finished last month. I marked it as an AB segment (blue). The current consolidation will join it with the next CD segment. To find the target, I added an equal distance to the recent low of $14.80. The outcome falls in the area of the former top of $18.94. The upside of the green uptrend channel is right in the same area. It could book a 22% profit from the current level, and it is more profitable than gold then.
The RSI indicator sank slightly below the crucial 50 level to have room for another rally. It already passed over the trendline resistance on the sub-chart, confirming the breakup.
Loading ... Loading ...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.
'Think it,s only a matter time before we get an upside breakout on both silver and gold
Dear Charles E. Moore, thank you for sharing! Best, Aibek
Why do you put the starting point A for gold much higher than the low reached in mid-March ?
For silver you choose the low in mid-March and the two charts are very similar in shape.
If you do the projection in the same way for gold as for silver the high point at D will be just shy of $ 2000 -
and this without artificially multiplying the AB-segment with a factor of 1,272. In addition point D will
fall very near the upper channel line though B.
Dear Robert,
Thank you for a good question. The reason why I put gold‘s “A” point higher is that I see the internal structure of it differently from what I see in silver. Global structure differs even more as you may noticed that gold/silver ratio hit the all-time high beyond 100 (that I projected in distant 2014 https://www.ino.com/blog/2014/12/goldsilver-ratio-is-going-to-hit-109-are-you-ready/) as gold eyes the record high while silver aims only at the nearest top so far.
Best regards, Aibek