Gold and silver 18 Jun

Well, the double top certainly was not in the cards.  What about a triple top?  The projection is the same so I left it on the chart. Fundamentally, the case for gold is solid with TEOTWAWKI around the corner.  Technically, we have this nagging divergence issue that raised its head at the second top.  Now it is still present as we arrive at the third top.  It will be resolved one way or another, either by another drop off or a run to new highs that will drag RSI and MACD to higher levels.  In the past, I would have given the odds at 90% for a downside move.  Is it different now?  You bet!  Is it so different that technicals do not matter anymore?  I would say not yet.  With that said, I expect that day to come and it will be the obvious mania stage associated with complete collapse of the global monetary system.

For know, the technical picture is murky.  Divergence exists in RSI (strongest divergence indicator), MACD, Slow Stochastics, and volume. This alone would suggest a triple top reversal, which is more or less the same as a double top reversal. Resistance is at the current price level and support is at the 18 day MA, followed by the previous swing low at 1215. Following the chart is what Chart School at Stockcharts.com says about a triple top.

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Triple Top (Reversal)

The triple top is a reversal pattern made up of three equal highs followed by a break below support. In contrast to the triple bottom, triple tops usually form over a shorter time frame and typically range from 3 to 6 months. Generally speaking, bottoms take longer to form than tops. We will first examine the individual parts of the pattern and then look at an example.

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   Prior Trend: With any reversal pattern, there should be an existing trend to reverse. In the case of the triple top, an uptrend or long trading range should be in place. Sometimes there will be a definitive uptrend to reverse. Other times the uptrend will fade and become many months of sideways trading.
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   Three Highs: All three highs should be reasonable equal, well spaced and mark significant turning points. The highs do not have to be exactly equal, but should be reasonably equivalent to each other.
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   Volume: As the triple top develops, overall volume levels usually decline. Volume sometimes increases near the highs. After the third high, an expansion of volume on the subsequent decline and at the support break greatly reinforces the soundness of the pattern.
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   Support Break: As with many other reversal patterns, the triple top is not complete until a support break. The lowest point of the formation, which would be the lowest of the intermittent lows, marks this key support level.
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   Support Turns Resistance: Broken support becomes potential resistance, and there is sometimes a test of this newfound resistance level with a subsequent reaction rally.
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   Price Target: The distance from the support break to highs can be measured and subtracted from the support break for a price target. The longer the pattern develops, the more significant is the ultimate break. Triple tops that are 6 or more months old represent major tops and a price target is less likely to be effective.

Throughout the development of the triple top, it can start to resemble a number of patterns. Before the third high forms, the pattern may look like a double top. Three equal highs can also be found in an ascending triangle or rectangle. Of these patterns mentioned, only the ascending triangle has bullish overtones; the others are neutral until a break occurs. In this same vein, the triple top should also be treated as a neutral pattern until a breakout occurs. The inability to break above resistance is bearish, but the bears have not won the battle until support is broken. Volume on the last decline off resistance can sometimes yield a clue. If there is a sharp increase in volume and momentum, then the chances of a support break increase.

Silver in a word is being silver. It has been trapped in a trading range for sometime between 17 and 18.50.  But, to tantalize you, the high at 19.44 sits there like a great big carrot.  It reminds you that silver can explode at any time.  SLV is currently at a breakout point as is gold and resistance is at the current price, with support at 45 day MA at 17.94.  Volume is thus far uninspiring.  Stochastics are now over-bought, but may be setting up for an embed (3 days above 80) which would be indicative of accelerating strength.  What worries me about silver is that deflation is starting to really take hold and it could punish silver due to its commodity aspect.  It is clear that deflation has exerted some influence already by virtue of the fact that silver is not anywhere near its all time high as is the case with gold.  A big rush to safety as we have seen more and more frequently occurring, sometimes intra-day, could really hurt silver and the entire broad commodity complex. 

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