PHYS and PSLV Update – 28 Mar

The pre-market in precious metals is down at this writing. PHYS, the real gold bullion ETF, is sitting right on short term support @ 12.66 and as of now that level will not be holding on the open. Stronger support exists lower in an area between 12.40 -12.47, where 2 previous swing lows occurred and where the Fibonacci 38.2% retrace lies. Obviously a break below the consolidation triangle will suggest a deeper correction and more sideways action at the least. If this is in the cards, a BTFD (buy the fucking dip) scenario presents itself once again. Look for RSI to fall below 50 and approach 30. Buy the stochastic cross of the faster line across the slow line. Or buy the blue bar following red bars on the Elder Impulse chart (see below).

The longer term chart shows price at long term support @ 12.70. This was the breakout point and was resistance, now turned support. A significant drop below this point suggests a false breakout and forecasts more sideways consolidation. It looks as if the best case scenario will be for price to follow the median line on the Andrew’s pitchfork, using the line as resistance instead of support. The intermediate trend is still up and within the green trend channel, albeit on the lower boundary.

The Elder Impulse chart is good for momentum trading and will show you when momentum surges or wanes. Another way to BTFD would be to wait for a blue or green bar following a series of red bars. The fundamental story for gold is not over and will be present for many multiples of current price. Investors will be rewarded for buying at any price. Traders will attempt to increase gains through speculation. Know thyself and act accordingly.

Since silver is opening lower, PSLV, the real silver Bullion ETF, is also opening lower and below current support @ 17.30. the next layer of support comes in at 16.50. Just above that level is natural support coming from the Fibonacci 38.2% retrace level @ 15.63. the fundamental picture in silver remains the same, so another BTFD (buy the fucking dip) trade presents itself.

The longer term chart shows price settling back to the median line of the Andrew’s pitchfork. This should provide support. Also, the 18 day moving average lies directly below @ 16.51 and will provide support. The next level of support below and has to be considered strong is the 14.90 level. It is a swing low and also the Fibonacci 38.2% level. I do not expect to see this level. Instead I see a higher low being made somewhere between there and the current price. A good BTFD scenario would be to buy when RSI hits 50, when price hits the 18 day moving average, or on a bullish stochastic cross of the slow line (red) by the faster line (black).

The Elder Impulse chart is painting a blue bar and signals exit from any long trades. The gold chart is painting a red bar that indicates a short trade. Silver has been the stronger chart and very few red bars are painted. I believe a more acceptable approach for silver is to buy the blue bars at strong support and certainly any red bars that are painted. Put in a strong and tight stop to protect on the down side. The blue bar is painted when either the MACD histogram bar is less than the day prior or the 13 day exponential moving average is less than the day before. This can be seen as a negative slope of the magenta line or the negative slope of a line tracing the boundary of the MACD histogram bars. In this case the histogram bar is less than it was on Friday and the 13 day EMA slope is still positive. If the EMA slope goes negative, then the bar will be painted red. We are close now as the slope is very nearly zero. Any further weakness will cause a red bar. A great BTFD opportunity presents itself here with a buy and a stop just below the low of the opening hour, say a stop around 16.70

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