Last month I was wondering “Is It A Trap?” for the top precious metals, referring to the short term bounce that we have been observing.
Bears have smashed the silver price badly below the former valley. Hence, I would start the update with its monthly chart below.
Silver futures topped around the $21 mark the same day the previous update was posted in the middle of August and then it dropped like a rock to the downside.
The price already drills down the largest Volume Profile (orange) support as it entered the $16-$18 range. The peak volume was registered at the $17 level in the monthly chart. Below $16 the support weakens and further down below $14 there is a volume support gap.
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I built the black downtrend with a red mid-channel in this big chart above. We could visually distinguish the first drop (large left red down arrow) from 2011 to 2015. The following huge corrective structure emerged during 2015-2021. Now the market could build the second leg down. The mid-channel support is located at $13.5, right below the above mentioned lower volume area.
We can mark the lower supports for the future. The Flash-Crash valley is at $11.6 fortified with the all-in sustaining costs located at $10.9. The valley of the distant 1991 at $3.5 is the next possible support.
Bulls should push the price outside of the downtrend beyond $27 to turn the tables.
Before we get down to the gold futures chart, I would like to update the U.S. 10-year Treasury yield (10Y) chart posted last March in the “Wake-Up Call For Gold” post. That post was prophetic for several markets as thoughts shared then start to play out now.
The 10Y impacts the gold price strongly as we saw earlier, therefore it is crucial to demonstrate the big picture…
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