Gold and Silver May 5 Update

GLD reversed from a new high to retrace back to support, finishing off the low at 114.87.  As happens many times when divergence is present on the chart, price looks for a reason to reverse.  Yesterday the reason was found, regardless of whether the reasons had any merit.  I find it interesting that the dollar rally is being attributed to save haven flow.  More accurately it is quickly becoming the global  last resort currency, rather than the global reserve currency of choice.  The thinking is equivalent to fleeing a house engulfed in fire and taking refuge in a house that is smoldering, waiting for a backdraft to explode.  Take a hard look at at Greece and understand that it is the beginning, not the middle or end.  Massive social disruption is now a certainty, both in Europe and later here.

Back to the charts.  The Elder Impulse system has rendered a blue bar and signals an exit from long trades.  The 13 day exponential moving average (pink) is still below current price, but the MACD histogram has taken on a negative slope.  As long as the 65 day MACD reading stays above 0, a green bar will result if the histogram can take on a positive slope.  The Elder system needs 3 things for any long trade: positive slope of the 65 day EMA, positive slope of MACD histogram, and positive slope of the 13 day EMA.  The MACD histogram and the 13 day EMA determine color.  Positive slopes in agreement render green, while negative slopes render red. Blue results when one slope is positive and one is negative.  After determining red or green, the 65 day EMA determines if the trade is long or short.  If price is above the 65 day EMA (indicated by 65 day MACD > 0), all greens become buys, while reds are ignored.  Blue indicates exit from trade.

Stochastics are rolling over and a cross of the 80 line suggests a test of the 20 day MA, currently at 113.21.   

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SLV painted a red bar on the Elder chart, meaning both the 13 day EMA and MACD histogram slopes are negative.  This is a potential short signal, but in this case is ignored because the 65 day EMA slope is positive (65 day MACD > 0).  Support is coming in at 17.30, previous price low and the Fibonacci 61.8% retracement line, after blowing through the 20 day MA.  The 3 month uptrend is valid until 17.30 is taken out.

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GDX is now painting a blue bar, the MACD histogram slope down and 13 day EMA slope up.  This is an exit indication from trades.  RSI is now working off an over-bought indication and stochastics have crossed the 80 line, indicating a target of the 20 day MA.  Divergence confirmed.  Support is coming from the 20 day MA at 48.27, followed by a range of 45.30 - 46.30 encompassing the 50 and 200 day MAs and a prior price support level.

 
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