RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Metals

Laboring Gold, Silver Positioning to Resume Broader Slides

Posted 04/11/2019 8:58AM CT | RJO Market Insights

JUN GOLD

Today’s failure below yesterday’s 1304.7 minor corrective low confirms a bearish divergence in very short-term momentum.  This admittedly short-term mo failure nonetheless defines yesterday’s 1314.7 high as the END of the recovery from 04-Apr’s 1284.9 low and a micro risk parameter from which a resumed bearish policy by even short-term scalpers can be objectively rebased and managed.  And the fact that this failure stemmed from within the past month’s increasingly lateral range between 1280 and 1325, we believe, reinforces a bearish count that contends this lateral range is merely corrective/consolidative and warns of a resumption of Feb-Mar’s downtrend that preceded it to eventual new lows below 1280.

27-Mar’s 1325.2 corrective high and 20-Feb’s 1349.8 high remain intact as key short- and long-term risk parameters for a still-advised bearish policy for short- and long-term traders.

Gold 240 Min Chart

Gold Daily Chart

Traders are reminded that the past month’s mere lateral and consolidative-looking chop comes on the heels of:

  • a confirmed bearish divergence in momentum that broke the broader uptrend from’
  • the extreme upper recesses of the massive 3-YEAR range
  • an arguably complete 5-wave Elliott sequence up from 16Aug18’s 1167.1 low amidst
  • a return to relatively frothy bullish sentiment.

Until and unless this market can recoup at least 27-Mar’s 1325.2 corrective high and preferably 20-Feb’s 1349.8 high, a peak/reversal threat remains well intact and warns of a larger-degree correction or reversal of a 6-month, $183 rally that has thus far only retraced 38.2% over a month-and-a-half.  Weeks, if not months of correction to at least the (1258) 50% retrace is easily envisioned.

These issues considered, a bearish policy remains advised with strength above 1314.7 and/or 1325.2 and/or 1350 (depending on one’s personal risk profile) required to defer or threaten this call and warrant defensive action.  The market’s position still in the middle of the past month’s 1280 – 1325-range does not preclude further lateral, aimless chop.  But until and unless this market recoups at least 1314.7 and preferably 1325.2, we anticipate an eventual an eventual resumption of Feb-Mar’s initial counter-trend decline to new lows below 1280 that could then expose potentially sharp losses.

Gold Weekly Chart

MAY SILVER

Silver 240 Min Chart

 

The technical construct and expectations for the silver market are virtually identical to those detailed above for gold with Tue’s 15.31 high and 21-Mar’s 15.65 high considered the micro- and key risk parameters the May contract needs to recoup to defer or threaten this bearish call.  04-Apr’s 14.86 low and support remains intact as a short-term risk parameter the market needs to break to confirm the resumed bear, but as a result of today’s bearish divergence in very short-term momentum, short-term traders can use this week’s 15.31high as a tight but objective risk parameter to a resumed bearish policy on the expectation of an eventual break below 14.86 and potentially sharp losses thereafter.

Silver Daily Chart

From a long-term perspective we still believe the lower-quarter of the 3-YEAR range offers a terrific risk/reward BUYING opportunity as part of a major, multi-year BASE/reversal environment.  But a steeper correction of Nov-Feb’s rally remains expected as a sub-component of this major base/reversal process.  In sum, a bearish policy and exposure remain advised with strength above 15.31 required to defer this call and above 15,65 to threaten it enough to warrant a move to the sidelines.

Silver Weekly Chart

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.