Special Gold Technical Post
MOOR ANALYSIS AND OUR TRADING TAKE
Good Morning. Yesterday Silver rocketed higher on the back of CTA short covering that got spooked with the Fed closed door meeting event.
We covered the Silver rally and shared on Zerohedge here in which we noted:
Silver in times like this will outperform Stocks in a QE type leg higher, which is what the market is currently pricing. In short, this is how Silver problems start.
Later in the day, Gold finally caught fire as well and rallied 2% (note it always stops at up 2% on any good day), but closed well below where it was last time Silver was approaching $21 an ounce. The last time Silver was here, Gold was trading $1820.
Silver leading the way so far....
Today we want to follow up on yesterday’s action and what it could imply. If you are interested, please read the whole thing. This is a risk reward trade analysis piece.
****These are not actionable for you. There is considerable risk in trading futures and commodities. Consult a broker***
BULLISH: ABOVE $1687.70 WARNS OF STRENGTH FOR WEEKS/MONTHS
Keeping it simple regarding the Technical level: We broke a level in gold yesterday that according to Moor warns of a potential rally in Gold that can last well into November and beyond.
Moor states as much in his dry matter of fact way:
The break above $1,687.7 now warns of significant strength for weeks/months. We have seen $31.8 so far. Solid trade back below where this comes in at $1,687.7 will negate the bias above it. ‘Solid’ will be $12.2 on GLOBEX/pre-open.
That quote is pulled from the graphic below highlighted in blue.Those who know Michael's work know that these report statements do not come lightly. The last time he saw one of these in Gold the metal was trading under $1200 (red rectangle). Here is a snippet of Michael's Gold report out this morning at 5 a.m.
H/T Moor Analytics produces technically based market analysis and actionable trading suggestions. Reports are sent to clients twice daily, pre-open and post close Go here for 2 weeks Gold, Oil, and Bitcoin free trial
The Potential…
Bottom line here is, on a very macro basis, if $1687 area holds in any dip, one can expect this market to move higher for weeks if not months into and beyond Gold's historical buy season which starts in late November.
That's not to say there won't be sell signals along the way, as you can see from the various technical levels levels Moor generates above and below as well. This report serves as a very macro bias for action above the $1687 price. So let's hope that level holds. If it doesn't the downside to $1500 opens up again as Michael warned us privately.
SPECULATIVE TRADERS
We are long Silver on spec and have been for months, just now getting in the money. Most recently we traded the long silver/short gold spread (GoSil) for a small gain (Founders knew this trade) compared to the massive move just seen between the two metals.
Today we are seriously considering buying Gold on spec in line with Micheal’s levels. Keeping in mind it’s a massive risk/reward but also a massive loss potential, our size will be smaller than usual given the large downside being risked to $1687.
IF WE ACT
If we act it will be to buy 1/3 today during the day, then buy 1/3 on any pullback below $1700 that does not happen with news out and just hold the last 1/3 for rainy day with stop losses near the $1687-1677 levels. This is a speculative trade.
WHY SMALL?
Because if Michael is right, you don’t have to speculate large to get the potential returns he is seeing. And if we get stopped out, we still want to be able to play again if the market once again reverses. You want 2 bites at the speculative apple on these.
For More on yesterday’s Silver action as well as some potential Davos Shenanigans:
More below