Precious Points

The Power to Move You

by Joe Nicholson aka Oroborean, TradingTheCharts.com | April 14, 2008

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“Risk is clearly to the… downside for gold and silver, even if relatively minor advances are seen intraweek.” ~Precious Points: Still Unstable, April 06, 2008

Tuesday was a good week for commodities, including the precious metals, but any readers of this update should have been skeptical, particularly since the rally in gold was halted exactly at the 5-day and 5-week moving averages! Though a relatively unsophisticated and unglamorous technique amongst the analysts’ varied tools, moving averages continue to be incredibly telling in the precious metals. 

Support and resistance at the moving averages has so far contained the rallies in gold, but prevented new lows. This situation may be about to change. The wave count in the chart below, showing important support at about 900 and the 38.2% retrace of the move off the recent bottom, is probably the most bullish case for gold from here. More immediately, however, gold faces resistance in the RSI and a MACD kissback, both of which will either break through bullishly or send gold searching for support lower.

The daily chart below reveals a similar situation in silver: resistance in the RSI and at key moving averages, and a kissback in the MACD that can either look very good on a bullish crossover or very bad on a failure.

In contrast, compare the copper chart below, where the technical indicators describe a far more robust and healthy market. The one flaw? Copper closed Friday below the 5-day sma for the first time since mid-March.

Copyright © 2008 Joe Nicholson aka Oroborean
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Disclaimer: This update is provided as general information and is not an investment recommendation. TTC accepts no liability whatsoever for any losses resulting from action taken based on the contents of its charts, commentaries, or price data. Securities and commodities markets involve inherent risk and not all positions are suitable for each individual. Check with your licensed financial advisor or broker prior to taking any action.

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Joe Nicholson aka Oroborean | TradingTheCharts.com | Website

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