Chris Vermeulen: Gold & Silver Pullback as Forecasted ..... Now for the Big Opportunity

A few weeks ago I wrote about how gold was starting to top and that everyone should expect a very sharp drop to the low $1600 area. How I came to this conclusion was though the use of inter-market analysis combining price patterns, gold futures volume, the dollar index and market sentiment. This allowed me to understand what the majority of other traders/investors were thinking and feeling. By knowing each of these market variables and crowd behavior I can accurately see into the future a few days with a high probability of success and most importantly with low downside risk.

Click Here to view part-1 on how I properly forecasted that gold would fall sharply in August "Dollar’s On the Verge of a Relief Rally...... Look Out!"

At the time when I forecasted gold to reach the low $1600 area gold was still building the top pattern so I could not say how long a recovering would likely take nor did I know exactly when to re-enter a long position. But now that we have seen how gold arrived at my target price I can form a new forecast.

Spot Gold Price Forecast – Daily Chart:

The gold chart below clearly shows rising volatility along with my topping pattern of three surges to new highs. It was August 31st when I warned subscribers and my followers that gold was about to top and that everyone should be taking profits or at least tightening their stops to lock in gains. Only three days later gold topped and it has not stopped falling since.

On August 8th gold had a large opening gap to the upside. This means the price opened the next day much higher from where it closed the previous session. It’s important to note that gaps especially for gold almost always get filled within a couple months. Seeing this gave me a solid reason to think that gold should pullback to this level during the next big correction in price.

Also during the month of August gold had to pullbacks only to continue to make the third and final high. This told me that when the top is put in place was a very high probability that we see the price of gold drop below both of Augusts’ lows and that would trigger stop orders sending the market sharply lower.

Now that we are seeing the stops being flushed out of the market it means the majority of speculative traders have exited their positions. So speculative traders who caused the large surge in gold to take place are now out. Once all the speculative traders have exited which should take place in the coming weeks or two we can expect some type of bounce or rally. I will keep a close eye on the intraday charts for subscribers as we near a potentially major trade setup.

Where are we in this gold bull market?

Well I feel gold is more fairly priced between $1632- $1660 area. Currently gold is trading at $1660 but if things play out like I have seen in the past we just may get one more dip this week to the $1600 area before gold truly puts in a bottom. Because gold went from a new high all the way down to Friday’s panic selling washout instead of a controlled ABC correction I feel a bottom will be more of a one day event. This type of bottom carries more risk and is more difficult to time and trade. So scaling in with a small position at this level and adding on a drop to $1630 then $1600 could prove to be the safest way into a gold position.

Forward looking I see gold bottoming over the next week or two then a nice relief rally to the $1775 area. Depending on how gold arrives there will alter my next gold forecast so let’s wait and see how things unfold.

Spot Silver Price Forecast – Weekly Chart:

Silver I call the "un-Safe" haven because to me it’s not a safe haven in the way everyone’s believes it be. I hear and see everyone including friends and family selling all their stocks and putting their money into silver. To me buying large amounts of silver with your retirement money is just ridiculous. I m sure my statement here will trigger an inbox of silver perma bulls (silver bugs) to send me hate mail but that’s fine as my assistant filters my emails so I don’t have to keep being reminded how rude some humans can be over an simple opinion........

Investments that can lose 25% in value within 2 days or lose 40% of it’s value in 5 months should not be traded nor invested in with large portions of anyone’s life savings, especially if you are over the age of 50 and have not proven to be a constantly profitable trader. No one can stomach losing that much of their nest egg.

That being said I do feel silver is in a similar situation as gold. I do feel a bottom is near. Silver has formed an ABC correction and the price and volume patterns seem to be in line with a typical bottoming pattern. After Friday’s massive selloff I feel silver may slide a little lower yet before putting in a bottom.

One thing to keep in mind with silver is that it is very thinly traded; there are a lot of speculative traders involved which push and pull the price to extreme levels on a regular basis. So if the broad stock market continues to sell off sharply then I expect silver to follow suit.

Pre-Week Precious Metals Trend Analysis Trading Conclusion:

The price action we have seen this year for both gold and silver indicate were are just warming up for something really big to happen. It could be a massive parabolic rally to ridiculous new highs in 2012 or it could be a large unwinding of the safe havens as countries sort out their issues and the big money starts moving out of metals and into currencies and stocks.

Only time will tell and that is why I analyze the market multiple times per week to stay on top of both long term and short term trends. So if you want to keep up with current trends and trades for gold, silver, oil, bonds and the stocks market check out TGAOG at The Gold and Oil Guy.com

Oil N' Gold: Crude Oil Weekly Technical Outlook For Sunday Sept. 25th

Crude oil dropped sharply to as low as 77.55 last week and the development affirmed the case that consolidation from 75.71 is finished at 90.52 and whole decline from 114.83 is resuming. Initial bias remains on the downside this week with 82.21 minor resistance intact. Retest of 75.71 should be seen first. Break will target 70 psychological level and then 100% projection of 100.62 to 75.51 from 90.52 at 65.60. On the upside, above 82.21 minor resistance will turn bias neutral and bring consolidations. But recovery should be limited by 4 hours 55 EMA (now at 85.68) and bring fall resumption.

In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38) next. Sustained break will pave the way to retest 33.2 low. On the upside, break of 90.52 resistance is needed to invalidate this view or we'll stay bearish in crude oil now.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave might be finished. Upon confirmation of medium term reversal, the third wave of the pattern should have started for a retest on 33.2 low.

Nymex Crude Oil Continuous Contract 4 Hours Chart

Crude Oil Makes Sharp Move Below $80, Here's Your Numbers For Friday Morning

Crude oil traded lower overnight and continues south of $80 this morning as it extends this week's sharp decline. Stochastics and the RSI are bearish signaling that lower prices are possible....make that "likely"....in the near term.

Is cluster support of  64.23 on the table? That's what trading shops are talking about today. And it's looking more and more like a possibility.

If November extends this week's decline, August's low crossing at 76.61 is the next downside target. Closes above the 20 day moving average crossing at 87.17 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 86.34. Second resistance is the 20 day moving average crossing at 87.17. First support is the overnight low crossing at 78.36. Second support is August's low crossing at 76.61. Crude oil pivot point for Fridays trading is 81.72.


Recent "don't miss" articles.....

Gold Continues to Correct as Forecast in a 4th Wave Pattern

Recent Market Trends Remain in Place ..... Get Positioned!

It's a Simple Theory.... Lower Equity Prices, Means Lower Consumption of Crude Oil

The massive move down in the crude oil market today is largely reflected in what we have been saying about this market for the past several weeks. It only underscores just how powerful our longer term Trade Triangle technology is. As you may recall we are tying the crude oil market with the equity markets. As the equity markets go, so does crude oil at the moment.

The theory is lower equity prices, means lower consumption of oil. It’s not important whether we agree or disagree with that statement. What is important is how the market is acting. Pay attention to the MACD that is beginning to lose momentum and could be rolling over to the downside if we have any more negative closes. Short, Intermediate and Long term traders should continue to be short the crude oil market.

November crude oil closed sharply lower on Thursday as it extended this week's breakout below August's uptrend line. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If November extends this week's decline, August's low crossing at 76.61 is the next downside target.

Closes above the 20 day moving average crossing at 87.49 would temper the near term bearish outlook. First resistance is the 20 day moving average crossing at 87.49. Second support is last Tuesday's high crossing at 90.60. First support is today's low crossing at 79.66. Second support is August's low crossing at 76.61.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 100

Recent articles.....

Gold Continues to Correct as Forecast in a 4th Wave Pattern

Recent Market Trends Remain in Place ..... Get Positioned!

David Banister: Gold Continues to Correct as Forecast in a 4th Wave Pattern

I got a bit of hate email over the last few weeks from the Gold Bugs who thought I didn’t know what I was talking about when I forecasted a multi-month consolidation and correction in Gold was imminent. I’ve written ad nauseum about crowd behavioral patterns as they related to both stock markets and precious metals. 

It should not come as a surprise that Gold is continuing to drop after a 34 Fibonacci month rally from $681 to $1910 per ounce. That rally came in five clear Elliott Waves and ended with a parabolic race to the top. I consistently warned my subscribers and readers of my articles about not being caught holding the bag and to take defensive measures.

My most recent update was to simply try to figure out whether the continuing correction in Gold would take the form of an ABC pattern or an ABCDE Triangle Pattern. It is becoming more clear that the official pattern is ABC. In English it means that the first leg down from 1910 to 1702 was the “A” Wave, the rally back up to 1920 was the “B” wave. 

The C wave is continuing underway and one of my longstanding targets is $1643, which is a Fibonacci fractal relationship to the prior lows and highs, and also conveniently fills in a “Gap” in the Gold chart in the 1650’s.

During these 4th wave consolidation periods, it reduces sentiment back down to normal levels and lets the economics of the move in Gold catch up with the price action that was extended. The first area to watch is the retest of $1702 spot pricing for a C wave low, but the evidence is for a further drop to $1643 before I would get too interested in trying to game Gold to the upside.

Here is the chart I sent out 9 days ago with Gold at $1837 forecasting a possible C wave continuing lower:

I’ve stayed away from either shorting Gold or going long gold while I watch and confirm the 4th wave pattern. It’s simply the smart way to go knowing that upside will be difficult to obtain and downside risks are high. It does now appear that I am eliminating the Triangle pattern and sticking with the ABC Correction with the C wave still working its way lower. If $1702 breaks, then you should expect to see 1620-1643 as next pivot low ranges.

If you’d like to stay ahead of the SP 500, Silver, and Gold trends, check out TMTF at Market Trend Forecast.Com and take advantage of our free occasional reports or a 33% 48 hour coupon to sign up for 5-7 updates a week.

Chris Vermeulen: Recent Market Trends Remain in Place ..... Get Positioned!

What a trading session Wednesday was with the FOMC meeting and the FED coming out leaving the Fed Funds Rate unchanged at 0.25% and saying the economy is looking weak and will not likely to get better any time soon. This wave of negative news triggered a selling spree across the board in stocks, metals, and oil. On the flip side all that money being pulled out of those investments was being dumped into bonds and the dollar currency.

So the question everyone is asking is why almost every asset class sold off after the Federal Reserve’s statement today? The next question is how do we position ourselves to profit?

Understanding how the market moves is not a simple task, if it was that easy everyone would be pulling money out of the market on a daily or monthly basis. With that being said, moves can be anticipated if enough indicators are pointing to the same outcome.

Gold, SP500 and Oil 10 Minute Charts Showing Todays 2:15 FED News
Over the past few weeks we have been seeing stocks, oil, and gold turn bearish with similar price and volume action. Having three major investment vehicles hinting towards a move in the same direction as each other increases the odds for that move to occur. With the Fed coming out with negative news and no quantitative easing on tap, a rally in the dollar was triggered because inflation (printing of money) is not in the picture for some time still.

Bonds and Dollar Index 10 Minute Charts Showing Today’s 2:15 FED News

Now if we look at the safe havens we can see the positive side to today’s news.

Bonds have been trading higher for some time and the key in trading is to trade with the trend. Though it’s easier said than done… In this morning’s pre-market analysis I talked about bond prices and how they are looking toppy but we need one more large surge higher before I will consider looking for a short trade setup. Today’s news sent bonds surging higher which I feel will happen for a few more days. Once the momentum stalls out of bonds, then I may be looking to short bonds using the TBT inverse bond fund.

The fact that there is no quantitative easing planned is bullish for the dollar. Stepping back a few weeks we have seen the dollar index rally very strongly. The move up was an impulse wave meaning a trend reversal from the multi-month down trend. Knowing that the dollar had shifted from a down trend to a strong uptrend prior to the Fed’s announcement today was our tip off to being long the dollar several days ago at a much lower price level.

Mid-Week Market Trend Conclusion:
In short, I feel the intermediate trend (5-20 days) remains firmly down for stocks and crude oil. Silver is more of a wild card because it is more of an industrial metal/speculative investment and it can move at times with gold or down with stocks.......

Looking at gold. I am bullish on gold long term but at this time I remain neutral until I see how the next couple trading sessions play out.

Bonds I remain neutral because they have moved a long way without any substantial pause or pullback and I feel one really positive headline news item could send bonds sharply lower.

The dollar index shifted from a strong down trend to a very strong up trend last month and I feel we could see another substantial rally unfold. I have an 80.00 – 81.00 price target on the dollar index at this time.

Consider joining me at The Gold and Oil Guy for ETF trade ideas on the SP500, crude oil, gold, and silver with great accuracy. Check it out at The Gold and Oil Guy.com

Commodities Collapse as Fed Operation Twist Sends Oil to 4 Week Low

No surprise to us, the Feds operation twist has failed to lift market sentiment and it's showing in any commodity that trades against the dollar. Crude oil was sharply lower in the overnight session as it extends this week's breakout below August's uptrend line. Stochastics and the RSI are bearish signaling that lower prices are likely near term.

So now we shift our focus to the Eurozone. Greece announced a new round of austerity measures. Pensions above 1200 euro will be cut by -20%, pensions paid to those younger than 55 will be trimmed by 40% for the amount exceeding 1000 euro and wages will be reduced for 30,000 state employees. While fiscal consolidation accelerates, protests also intensify. Public services will be suspended for 24 hours in Athens today. Flights to and from the Athens International Airport will also be disrupted as staff walk out for 3 hours proving that getting the Greek public to play along and play nice will prove near impossible.

If crude oil extends this week's decline, August's low crossing at 76.61 is the next downside target. Closes above the 20 day moving average crossing at 87.58 would confirm that a short term low has been posted.

First resistance is the 20 day moving average crossing at 87.58. Second resistance is last Tuesday's high crossing at 90.60. First support is the reaction low crossing at 79.76. Second support is August's low crossing at 76.61. Crude oil pivot point for Thursday morning trading is 86.19.

Bloomberg: Crude Oil Drops a Second Day as Fed Sees Economic Risk

Crude oil fell for a second day in New York as investors speculated that fuel demand will falter after the U.S. Federal Reserve said there are “significant downside risks” to the economic outlook of the world’s biggest crude consuming nation.

Futures slipped as much as 2.1 percent after dropping 1.2 percent yesterday. The Fed said it will buy $400 billion of long term debt in an attempt to keep the economy from relapsing into a recession. U.S. gasoline stockpiles climbed more than forecast last week and the nation’s oil production rose to the highest in eight years, Energy Department reports showed.

“It’s quite clear at the moment there is a lot of bearishness,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty Ltd. in Sydney. “The global growth scenario continues to be clouded, all the commodities were hit and oil clearly didn’t escape.”

Crude for November delivery dropped as much as $1.77 to $84.15 a barrel in electronic trading on the New York Mercantile Exchange and was at $84.51 at 12:29 p.m. Sydney time. The contract yesterday fell $1 to $85.92. Prices are 13 percent higher the past year......Read the entire article.

Adam Hewison: Lloyds of London Pulls Deposits From Banks on Debt Crisis

As traders, we are bombarded with news. Some of it is useful, but a lot of it is just fluff to fill up airspace time. One piece that caught my eye this morning, which I haven’t seen reported in the main media, concerns the venerable Lloyds of London insurance company. This company was founded in 1688 in a London coffeehouse and has gone through wars, boom and bust cycles, every money mania known to man and has always managed to survive. The article claimed that Lloyds of London is taking their cash out of the European banks this morning. From Businessweek Magazine "Lloyds of London Pulls Deposits From Banks on Debt Crisis"

Quite frankly this is shocking, but not surprising given Lloyds’ survival instincts. Lloyds of London is one of the most conservative companies, run by some of the smartest people on the planet. Perhaps it’s an early warning sign about what could potentially happen in Europe.
It is something to think about.

Crude Oil Market Commentary
There is not much going on in the crude oil market, as it continues to remain in a fairly broad trading range with resistance very evident at the $90 a barrel level. Support comes into this market between $84 and 84.50 a barrel. The crude oil market is presenting a mixed picture at the moment with our longer term monthly Trade Triangle negative and our intermediate term weekly Trade Triangle positive. This has created a trading range at the moment. The crude oil market remains in a sort of sideways motion, but with a bias to testing the lower range of the Donchian trading channel.

The Williams % R indicator is stuck in the middle giving no real clue as to direction. Also pay attention to the MACD since it is beginning to lose momentum and could be rolling over to the downside if we have any more negative closes. We do not think that the crude oil market is ready to go higher, based on our long term monthly Trade Triangle which remains negative. The $90 a barrel resistance continues to stop this market on the upside. Look for crude oil to continue to move in a sideways to lower manner.

November crude oil closed lower on Wednesday as it consolidates below August's uptrend line crossing near 87.60. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below last Monday's low crossing at 85.17 would confirm an end to the corrective rally off August's low while opening the door for a larger degree decline into the end of September. Closes above the May-July downtrend line crossing near 91.34 would confirm an end to this summer's decline.

First resistance is last Tuesday's high crossing at 90.60. Second resistance is the May-July downtrend line crossing near 91.34. First support is last Monday's low crossing at 85.17. Second support is the reaction low crossing at 83.47.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 75

Oil N' Gold: Crude Oil, Natural Gas, Gold and Silver Market Commentary

Crude Oil posted an inside day with a higher close on Tuesday as it consolidated some of Monday's decline but remains below August's uptrend line crossing. The high range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI have turned bearish signalling that sideways to lower prices are possible near term.

Natural Gas closed lower on Tuesday as it extends the decline off last week's high. The low range close sets the stage for a steady to lower opening when Wednesday's night session begins trading. Stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near term. If it extends this summer's decline, monthly support crossing is the next downside target. Closes above the 20 day moving average crossing would signal that a short term low has been posted.

Gold posted an inside day with a higher close on Tuesday as it consolidates some of this month's decline but remains below the 20 day moving average. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain neutral to bearish signalling that sideways to lower prices are possible near term. If it extends this month's decline, the reaction low crossing is the next downside target. If it renews this year's rally into uncharted territory, upside target are hard to project.

Silver posted an inside day with a higher close on Tuesday as it consolidates some of this month's decline but remains below the July-August uptrend line crossing. The high-range close set the stage for a steady opening on Wednesday. Stochastics and the RSI remain neutral to bearish signalling that sideways to lower prices are possible near term. If it extends this month's decline, the reaction low crossing is the next downside target. Closes above the 20 day moving average crossing would temper the near term bearish outlook.