Since the movement in currencies (specifically The Euro and $AUD moving up is supportive of risk assets and the $USD and Yen moving up pressures risk assets) it's not surprising that Gold and Silver are behaving in a way that is very similar to Index futures or the Market averages, as I wrote about the change this weekend because I felt it was a very important dynamic that would define trade moving forward (more so than it has in the past).
We all know Gold and Silver have taken extraordinary plunges recently, there are a lot of potential causes, I believe chief among them is the collapse and therefore margin maintenance required in the Japanese JGB (bond) market, which isn't a big deal to most of us, but for institutional traders, it's a huge, very liquid market and they also tend to be the ones who have good profits in Gold any way over the last several years so it's a good place to come up with additional margin money.
Here's Gold and Silver Futures (and just to be honest, so far we have almost everything we have been looking for, it looks good for a high probability/low risk trade, but we still need 1 more thing which we should see today-accumulation of either price decline or consolidation).
SI (Silver Futures)
SI 15 min 3C chart (remember the longer the timeframe, the stronger the signals of underlying trade). After the collapse and in to the lows of Silver for the week we see a 3C relative positive divergence (white arrow) that moved to a leading positive divergence which is stronger (white box) since. This has the look of the start of a "W" base, but it may consolidate sideways, I would think some downdraft would be more likely, but accumulation is most often seen in either prices moving down or a steady lateral trading range.
Silver 5 min chart offers more detail, the signals are not quite as strong, the trend is not quite as defined, but it gives us better near term signals. We have the same thing on the accumulation side, a relative, then leading positive divergence, it does look like there's a relative negative divergence or some distribution, although not too heavy compared to the accumulation, it could be just enough to bring prices down, we'll check the regular market assets after morning trade has settled in a bit.
The 1 min chart is pretty much since the close yesterday of normal market hours through over night to the present. Mostly we have seen 3C in line with price with several corrections, there's a small negative divergence currently so this may bring prices down. We'll check SLV shortly to see if we have confirmation. If so, then we'll be looking for accumulation in to lower prices and an area where we might go long for a trade (whether options, leveraged ETF, something else or no trade, will depend on the signals we get today).
YG (Gold Futures)
YG 15 min chart shows the same 3C signals as silver, accumulation.
TG 5 min essentially shows the same theme as silver futures, currently a negative divergence suggesting intraday prices move lower, although they may consolidate laterally at some point.
The intraday 1 min chart since yesterday afternoon and overnight shows 3C negative divergences or distribution, on this timeframe the signals and underlying trade are nowhere near as strong as the 5 or 15 min chart so the negative divergences would be more to turn Gold down than to actually distribute shares for the purpose of unloading, it would be more like a course correction.
We'll look to confirm in GLD as morning trade settles (as there are a lot of games in a.m. trade-stop hunting, limit order runs, etc).
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