Precious Metals GLD/SLV

You may recall last week I was suspicious that we would see a bounce in both SLV and GLD (I was more concerned about SLV) as a break of major support often sees a bounce shortly thereafter. We could also consider the shakeout potential, which I will not address at this time as I do not have sufficient evidence that this may be the case.

Both charts are looking stronger today then they have since the break.

 GLD daily chart-GLD broke down after a false breakout in the red box. I could have drawn the bottom trendline a different way making the triangle wider, but I choose the trendline with the most connections, volume on the break of the trendline confirms as well this was the correct trendlne (just as an aside for educational purposes as drawing trendline can be arbitrary at times and we always want to be as objective as possible).

 Here's the 15 min chart of GLD with the negative divergence at the false breakout, currently there are some relative positive divergences on this GLD chart.

 The short term GLD chart is in a leading positive divergence and looks like it has some upside, although if there's to be a bigger move, watch for a trading range to develop with accumulation.

 SLV broke down from an ascending bearish wedge within the triangle on this daily chart. As I mentioned last week, a move back to the former support is a common occurrence.

 The 15 min chart shows a pretty stable positive relative divergence and the volume surge could be indicative of short term capitulation which can lead to a lateral base or a counter trend move (up).

 The 1 min chart in SLV shows a slight leading divergence. Again, if there is to be a bigger move in SLV then just a bounce, I would expect to see a lateral trading range develop with positive accumulation, otherwise at this point with what is visible now, it looks like a bounce.

The Dodd/Frank Bill which will prohibit OTC trading of the PMs may have some drastic consequences in the intermediate term as retail traders will have to close positions before the law comes in to effect. It appears hedge funds may also be effected, this would cause a lot of intermediate volatility in the PM space. Furthermore it would bring most of the PM trading under the regulation of the exchanges including the COMEX margin rules. The law is supposed to protect investors, but it seems they are herding investors in PMs into a more highly regulated market which will drastically curtail speculative trades in the PM space as well as other asset classes included in the OTC prohibition.