GLD/SLV

Here's yesterday's GLD/SLV analysis 

And this is what I wrote yesterday in an email to a member regarding GLD:

"I meant that the bear flag doesn't appear to be falling apart yet so it could/should rise a little longer, but ultimately it doesn't look good overall. This is just a bearish consolidation, I don't see it turning things around, but there will probably be a 1 day event that makes it appear as if the bear flag has failed as it's obvious to traders, so an upside breakout (or false breakout rather) would be likely if we get another day or two of upside. You may be early on DZZ."


We commonly see false breakouts or breakdowns of very familiar technical patterns like a bear flag and even more so in an ETF like GLD which is a hot trade that everyone is watching so as you can see by my email yesterday, today's price action is not at all surprising. However, we need to put it in context of several major events that have changed the picture overnight: The PBOC RRR hike by 50 basis points, The USD, JPY intervention and events in MENA and perhaps most influential today is Goldman Sachs buy rating on Gold just issued (I always am suspicious of these type of announcements-I do believe they are self serving, but to what end?)


Lets take a look at the action thus far.

Resistance on the daily chart of GLD

This a.m.'s initial move was confirmed, there's a negative divergence now with very high volume

It's also showing up on the 5 min chart, so this "may" be what I was referring to in the email. Right now itcertainly looks that way, making me wonder if GS's buy rec'd was to sell into demand?

SLV's daily resistance level

And the same action this morning in SLV

Here the 5 min chart doesn't look as bad, but it's not confirming, once again making me suspicious that GS used the buy red'c which was specific to gold, to sell into demand.


We'll just have to keep watching to see if the divergence spreads. Even though I had this expectation, emotionally you doubt yourself on a move like this, so I rely on the charts. My opinion isn't of any consequence, what happens on the chart is and thus far it's confirming the expected outcome.