Gold Stems Suspected Correction Where It Needs To Within Broader Bull

September 2, 2016 4:06AM CDT

DEC GOLD

The market's recovery this morning above our short-term risk parameter defined by Tue's 1328.9 minor corrective high confirms a bullish divergence in short-term momentum that leaves yesterday's 1305.5 low in its wake as the END to at least the decline from 16-Aug's 1364.3 high.  And while the market remains capped by key former 1335-area support that is considered a new resistance candidate, this morning's recovery exposes the entire Aug sell-off attempt from 1374.2 to Tue's 1305.5 low as a 3-wave affair as labeled in the 240-min chart below.  Left unaltered by a relapse below 1305.5 , this 3-wave decline may be considered a corrective/consolidative one that warns of a resumption of this year's earlier and major uptrend that preceded it. In this regard 1305.5 is considered our new short-term parameter from which the risk of non-bearish decisions like short-covers and cautious bullish decisions can now be objectively based and managed.

Gold 240

Gold Daily

Both the daily (above) and weekly (below) log scale charts show the market thus far holding at a key area of major former resistance from the 1306-area from early-May that would have been expected to hold as new support IF something broader to the bull side was still unfolding.1307.4 was the 38.2% retrace of May-Jul's 1201.5 - 1377.5 rally and contributed to this area as a key support candidate.  As a result of this morning's rebound, the market has reinforced this area in general as support and defined yesterday's 1305.5 low specifically as an objective risk parameter to non-bearish decisions and one from which this year's major uptrend may resume to eventual new highs above 1378.

These issues considered, shorter-term traders have been advised to neutralize any cautious bearish exposure and are next advised to first approach setback attempts to the 1320 level OB as corrective buying opportunities with a failure below 1305.5 required to negate this call and move to a neutral-to-cautiously-bearish stance.  Longer-term players are advised to pare bearish exposure to more conservative levels and jettison the position altogether on a recovery above 1340 ahead of an eventual return to a bullish policy.

Gold Weekly

SEP SILVER

The bullish divergence in short-term momentum resulting from this morning's recovery above 23-Aug's 19.09 minor corrective high presents a similar base/reversal-threat condition in Sep Silver, leaving 25-Aug's 18.44 low in its wake as the end to at least the decline from 10-Aug's 20.515 high and possibly the end to a 3-wave and thus ((bull market) correction from 02-Aug's 20.835 high. Former 19.27-to-19.51-range support remains intact as a new resistance candidate however, with a recovery above 08-Aug's 19.515 (possible 1st-Wave) low required to increase the odds that Aug's sell-off attempt was indeed a correction within this year's major uptrend.

Silver 240 Silver Daily

While Aug's relapse was not unimpressive, relative to the magnitude of this year's major reversal higher it falls well within the bounds of merely a correction within this uptrend that could have significant gains ahead that could span months or even quarters.  Further strength above the 19.51-area support-turned-resistance is the next requirement of the bull for this to be the case however.  In effect the market has identified 19.515 and 18.44 as the key directional triggers heading forward with today's 18.825 low considered a micro risk parameter the market would be expected to sustain gains above if a broader bullish count is to remain preferred.

In sum, shorter-term traders have been advised to move to a neutral/sideline position and are next advised to first approach setback attempts to the 19.08 level OB as corrective buying opportunities with a failure below 18.825 required to neutralize this exposure.  Longer-term players are advised to pare bearish exposure to more conservative levels and cover the position entirely on a recovery above 19.52.

Silver Weekly

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