EDITOR'S NOTE: Three metals are approaching oversold bounce levels. What does it mean? Interpreting price action on a chart is a nuanced skill that requires one to see the markets from multiple angles. Far from reading tea leaves, chartists analyze traces of collective market behavior and activity. Charts can tell you where critical price levels are located, where short sellers are likely to close their positions, and where buyers are likely to jump in. According to the technician/author below, gold, silver, and palladium are all approaching major buying points. Two are approaching critical support while one is approaching a critical resistance-turned-support plus a strong Fibonacci retracement measure. If this sounds like mumbo jumbo to you, then you should probably look up the terms (try Investopedia). These measures can give you a near-term tactical edge that longer-term fundamentals cannot. So, if you’re looking to nuance your buy strategy, it helps to understand the technical mechanics driving the markets from a price action perspective. If anything, it can only make your fundamental understanding of the metals markets even stronger.
As we watch the price action in the precious metals, there is no doubt that we will see a natural bounce from oversold conditions. The speed and angle in which gold and silver are falling is too fast, too steep, and will see an oversold bounce.
However, oversold bounces are really selling opportunities in down-trending markets. There is no reason to believe that the trend in metals will change anytime soon. As much as many of you will convince yourself of a false narrative, the metals are headed lower based on current conditions.
Source: Kitco News
There is always a fine line between a bear and bull market; gold, silver, and platinum are in bear markets as of now. Until something changes, all rallies into resistance levels should be sold. We have seen no evidence that a change forthcoming.
We know that eventually, the market will change, and the precious metals will find another bull market. However, for now, the only buying should be physical metals that you can afford to hold if the bear market extends much lower. No leverage, no margin, just cash purchases.
Source: Kitco News
Precious metals should be owned on a physical basis with capital that is not needed tomorrow or anytime soon. Trading should be done with paper knowing that we can trade either side without emotions.
In all markets, price action determines what will happen in the next day, week, or month. Keep the two strategies separate. The worst trade anyone can make is turning a trade into an investment hoping for a way out. Traders must learn to take their losses and move on to the next trade.
Patience, discipline, and money management always win the day. Let the map of the markets show you the way.