3… 2… 1… Let The Corrective Rally Begin

Folks, it seems that gold has formed an interim bottom, and a short-term corrective upswing is now likely, before the medium-term downtrend resumes.

Any further declines from this point are not likely to be significant for the short-term. The same applies to silver and the miners.

In yesterday’s (Mar. 4) intraday Gold & Silver Trading Alert, I described briefly why I think that the very short-term bottom is already in (or is at hand), and in today’s analysis, I’ll illustrate my points with charts. Let’s start with gold.

ChartDescription automatically generated

Figure 1 – COMEX Gold Futures (GC.F)

Gold just reached its 61.8% Fibonacci retracement level (based on the entire 2020 rally), and it just bounced off the declining red support line based on the August and November 2020 bottoms.

Gold didn’t reach the previous 2020 lows just yet, but it moved very close to them and the two strong above-mentioned support levels could be enough to trigger a corrective upswing. After all, no market can move up or down in a straight line without periodic corrections.

I previously wrote that when gold moves $1,693 we’ll be closing any remaining short positions, and when gold moves to $1,692, we’ll automatically open long positions in the miners. Since gold moved below $1,690, that’s exactly what happened.

Yesterday (Mar. 4), gold futures were trading below $1,692 for about 10 minutes, so if you acted as I had outlined it in the Gold & Silver Trading Alerts, you made your purchases then. The GDX ETF was trading approximately between $30.80 and $31 (NUGT was approximately between $49.30 and $50) at that time – this seems to have been the exact daily bottom.

One of the bullish confirmations came from the silver market.

Chart, histogramDescription automatically generated

Figure 2 – COMEX Silver Futures

I previously wrote that silver is likely to catch up with the decline at its later stage, while miners are likely to lead the way.

While gold miners showed strength yesterday, silver plunged over 4% before correcting part of the move. Yesterday’s relative action showed that this was most likely the final part of a short-term decline in the precious metals sector, and that we should now expect a corrective rebound, before the medium-term decline resumes. If not, it seems that the short-term bottom is at hand and while silver might still decline somewhat in the very short term, any declines are not likely to be significant in case of the mining stocks. At least not until they correct the recent decline by rallying back up.

Speaking of mining stocks, let’s take a look at the GDX ETF chart.

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Disclaimer: All essays, research, and information found on the Website represent the analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong ...

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Adam Reynolds 4 weeks ago Member's comment

Sounds good to me!

Przemyslaw Radomski, CFA 4 weeks ago Author's comment

To be 100% clear and honest - I changed my outlook close to the end of the session yesterday based on the levels reached in the USD Index, stocks, and on gold's intraday weakness relative to the USDX.

Przemyslaw Radomski, CFA 4 weeks ago Author's comment

I'm still bullish for the very long term, but it now seems likely to me that the next short-term move will be down.

Alexa Graham 1 month ago Member's comment

Yes please!

Przemyslaw Radomski, CFA 1 month ago Author's comment

Looks like a weekly (or so) rally just started.

Przemyslaw Radomski, CFA 4 weeks ago Author's comment

aaand it might have just ended...