Posted on Apr 04, 2023, 10:45 by Dave Toth
Today’s clear, impulsive break above the past couple weeks’ 2005-to-2015-area resistance reaffirms the developing bull trend and our bullish count with the important by-product being the market’s definition of yesterday’s 1965.9 low as the latest smaller-degree corrective low it would be expected to sustain gains above per a more immediate bullish count. Its failure to do so will confirm a bearish divergence in daily momentum, break the uptrend from at least 28-Feb’s 1810.8 larger-degree corrective low and expose a correction lower that, as we’ll discuss below, could be more protracted in scope. Until and unless such sub-1965.9 weakness is confirmed, the trend is up on all scales and should not surprise by its continuance or acceleration straight away.
Former 2005-to-2015-area resistance is considered new near-term support.
The daily log chart above shows today’s continuation of what has become a very impressive rally from 03Nov22’s 1618.3 low. this chart also shows the developing POTENTIAL for a bearish divergence in momentum. but this indicator will only be CONFIRMED to the point of non-bullish action like long-covers IF/when it fails below 1965.9. Until and unless such weakness is proven, the trend is up on all scales and should not surprise by its continuance or acceleration straight away.
We want to beware any bearish divergence in momentum “up here” because of:
- the market’s return to the upper-quarter of the range and resistance that has dominated it for the past 2-1/2-YEARS and
- the return to historically extreme bullish sentiment/contrary opinion levels in our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC.
If there’s a time and place for this market to once again fail miserably, it is here and now under these conditions. And we will navigate such a threat precisely around yesterday’s 1965.9 low. Until/unless such weakness is proven, there’s no way to know how high “high” is, including a breakout to new all-time highs above Aug’20’s 2089 all-time high.
Finally and from an even longer-term perspective, the monthly log chart below shows the clear 3-wave and thus corrective structure of 2020 – 2022’s sell-off attempt that warns of an eventual resumption of the secular bull tend to new highs above 2089. Whether this current rally is THAT rally remains to be seen. But until and unless this market fails below at least 1965.9, traders should hardly be surprised if this bull continues to new all-time highs, especially given the relative strength in the euro, British pound and yen currencies.
These issues considered, a bullish policy and exposure remain advised with a failure below 1965.9 deferring or threatening such a call enough to warrant defensive measures. In lieu of such weakness, further and possibly accelerated gains to new all-time highs should not surprise.
While the silver market has yet to engage the upper-quarter of its past 2-1/2-years’ range as gold has, today’s break above the past quarter’s resistance around 24.775 reaffirms the major bull trend from last Sep’s 17.40 low and leaves yesterday’s 23.725 low in its wake as a tight parameter from which the risk of a still-advised bullish policy and exposure can be objectively rebased and managed. A failure below 23.725 will confirm a bearish divergence in momentum, break this uptrend and expose a corrective relapse of indeterminable scope that would be best avoided by paring or neutralizing exposure and keeping some powder dry for another preferred risk/reward buying opportunity. Until such sub-23.725 weakness is proven, the trend is up on all scales and should hardly surprise by its continuance or acceleration straight away.
The daily log chart above shows today’s continuation of the impressive rally from 10-Mar’s 19.945 low and 61.8% retrace of Sep-Jan’s 17.40 – 24.775 rally that has broken 03-Jan’s 24.775 high. On the broader weekly log chart below, this exposes an area totally devoid of any technical levels of merit shy of Mar’22’s 27.495 high. This doesn’t mean we’re forecasting a move to 27.49, but it certainly does mean that the market’s upside potential is indeterminable and potentially extreme until and unless arrested by a countering bearish divergence in momentum below levels like 23.725.
These issues considered, a bullish policy and exposure remain advised with a failure below 23.725 required to defer or threaten this call enough to warrant defensive measures. In lieu of such weakness, further and possibly accelerated gains remain expected.