by Dave Toth
Yesterday’s continued weakness, this time below Tue’s 21.115 low, reaffirms the developing major downtrend and leaves smaller- and larger-degree corrective highs in its wake at 21.97 and 23.345, respectively. These levels serve as our new short- and longer-term risk parameters from which a bearish policy and exposure can be objectively rebased and managed.
On a broader basis, this week’s clear, impulsive break below the past YEAR-AND-A-HALF’S 21.41-area support resurrects a major peak/correction/reversal count that dates from Aug’20’s 29.915 high. The still-arguably-lateral price action from that 2020 high maintains the ultimately bullish prospect that this behavior is corrective/consolidative ahead of an eventual resumption of 2020’s major uptrend that preceded it. But if this is the case, then somewhere along the line AND SOON, this market needs to arrest the clear and present and major downtrend with a bullish divergence in momentum above at least a level like 05-May’s 23.345 larger-degree corrective high and key long-term bear risk parameter. Until and unless such strength is proven, there is no way to know the decline from 08-Mar’s 27.495 isn’t the dramatic 3rd-Wave of a reversal lower that could be major in scope and see steep, accelerated losses straight away.
These issues considered, a bearish policy and exposure remain advised with a recovery above at least 21.97 required to even defer, let alone threaten this count. In lieu of such strength, further and possibly accelerated losses straight away remain anticipated.
From a short- and longer-term bear risk perspective, the technical construct of gold is identical to that detailed above in silver, with yesterday’s break below Tue’s 1830.6 low reaffirming the developing and potentially major bear trend and, most importantly, leaving smaller- and larger-degree corrective highs in its wake at 1858.8 and 1910.7 that now serve as our new short- and long-term parameters from which to rebase and manage the risk of a still-advised bearish policy and exposure.
On a long-term basis and UNlike silver, the weekly chart below shows gold still within the middle-half bowels of the 2089 – 1673-range that has encompassed it for the past 21 months. The developing impulsiveness of the relapse from 08-Mar’s 2078 high warns of continued weakness to the lower-quarter of this range and possibly a sub-1673 breakdown below it. Anywhere along the line and especially from the lower-quarter of this range below rough 1775, we will be watchful for a sell-off-stemming bullish divergence in momentum that could present a favorable risk/reward buy. Until and unless this clear and present downtrend is compromised by such a momentum failure however, further and possibly accelerated losses remain anticipated.
In sum, a bearish policy and exposure remain advised with a recovery above at least 1858.8 and preferably 1910.7 required to defer or threaten it. In lieu of such strength, further and possibly accelerated losses remain expected.