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Gold, Silver, Oil & Nat
Gas Technical Update
by Chris Vermeulen
Gold, Silver, Oil & Nat Gas Technical Update
This week commodities have
been moving higher which is exciting. Gold, silver, oil and natural gas all have
bullish looking daily and intraday price action. Monday we saw commodities spike
higher and profit taking Tuesday and Wednesday. I am expecting a sharp move here
and it could be in either direction, so this report is to keep you on your toes.
Gold & Silver Sector
Below is the monthly chart
of the HUI index (gold stocks). With the recent move in precious metals we are
seeing gold stocks surge higher. The monthly chart generates long term buy
signals. We are looking for a breakout above the red resistance trend line and
if we get a breakout then I expect prices to surge higher for gold stocks, gold
and silver bullion.
Gold Miners Index GDX
ETF Daily Chart
Here is a chart of the
gold miners exchange traded fund. This chart generated a low risk buy signal for
us last week and looks to be setting up for another move higher. The reason I
think we will see prices move higher tomorrow is because the intraday price
action was bullish for both gold stocks and gold bullion. The red candle shows a
long lower wick. This shows prices sold down and buyers stepped in buying up
gold stocks. If we get a rally this week and make a new multi week high then we
are able to draw a new support trend line. We will use this level as our stop
(exit point) if price breaks below.
Gold Bullion Fund GLD
ETF Daily Chart
Gold has similar price
action and we hope to see higher prices.
Silver Bullion SLV ETF
While gold and gold stocks
have been moving sideways for two days silver continues to rally. Silver can act
as a leading indicator for gold so it is exciting to see prices rise.
The Energy Sector
Crude Oil USO ETF
Crude oil; broke out above
our resistance trend line this week and has been moving sideways since Monday.
This fund could pop up or down quickly here. I do not think its a good idea to
be chasing it here.
Natural Gas UNG ETF
Seems like everyone wants
to trade natural gas. I actually think more people are watching it than gold.
Which is understandable because I too think Nat Gas has huge potential in the
mid long term time frame. This commodity/fund has chewed up more traders than
any other fund. Maybe USO sucked as many people in; either way people are losing
their shirts or already lost them with UNG!
Its amazing how well some
traders can buy at the high and sell almost at the very bottom when trading on
emotions (fear and greed). Thats exactly what happens to traders when they see
something with so much potential. Traders are thinking price could spike 50- 75%
so they buy UNG because they are scared to miss out on the rally. Then greed
sets in, they either buy more than they should have (large portion of their
portfolio) or they buy more when the price drops a little. Eventually when
prices break down and start to free fall all the weak hands bail out of their
positions taking a nasty loss.
All this started because
they think natural gas has HUGE potential and did not want to miss out. I do
like natural gas but until I get a setup I keep my powder dry. If there is half
the potential everyone is talking about then why is everyone so persistent at
trying to pick the exact bottom? I do not bottom pick in a bear market, its not
what successful traders do. Wait for the momentum to shift and jump on board
when risk is low. I just want the low risk middle section between the bottom and
The monthly hui chart is
getting close to a long term buy signal. With any luck our recent buy signal in
GDX will have us in early for the big breakout and multi month rally. I do not
forecast but technically speaking the charts are looking bullish for precious
metals. It is time for commodities to shine as they pause to take a breather. We
could get a sharp drop or a nice pop higher in the next couple days only time
will tell so be ready to lock in some gains if things start to slide.
The energy sector had some
nice price action this week and with any luck we will have a low risk buy
signals for our funds in the coming weeks.
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This article is
intended solely for information purposes. The opinions are those of the author
only. Please conduct further research and consult your financial advisor before
making any investment/trading decision. No responsibility can be accepted for
losses that may result as a consequence of trading on the basis of this