Gold and Silver 21 Jun

The divergence I spoke of last week may be coming to the forefront today in gold price action.  Technicians do not miss this things, and technical weakness certainly exists.  Balancing this is the fundamental stregth of gold that has been, and will continue to be unassailable.  Which force wins?  In the past, technical weakness has been punished and is all I can really say.  I can also say that time compression is occuring now in all markets, where events that took weeks and months to happen are now occuring in hours and days.  Technical weakness can be dealt with in very short order and it can be back to the fundamental driving force.  The old gold warriors, the real braintrust in gold, they have warned that the end would be something to behold and that trading would be a very risky proposition.  I must believe what that they say from watching the metamorphisis of the markets in the last two years from a quasi-rational into a whipsaw factories from Hell, drivin by trading algorithms gone mad.

Today, GLD is painting a big, ugly red candle.  In the days of old just a few years ago, this would likely be the beginning of a "waterfall" where this candle would be the first of a series of candles that fell straight down.  Will that happen this time?  I have not even the slightest clue.  I will say that support lies in the 119-120 range, corresponding to 1200-1215 range in gold itself.  This where the 18 day MA and the previous swing low lie.  This would need to hold for the current short term uptrend to remain intact.  Watch the close for a some relief buying to come in or for weakness to prevail and close at the low. At any rate, I would say we will be seeing a test of the 119-120 area in rather short order.  Stochastics are hooking over to make a bearish cross of the 80 level which targets the 18 day MA, currently at 120.

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Silver is getting the wood put to it also.  SLV has retreated back down to the upper limit of the recent trading range that it broke from last week.  This was resistance and has now turned to support on the way down.  Also, both the 18 and 45 day MAs are providing support around 18.0.  Stochastics are hooking hard for a bearish cross of the 80 level that will target the 18 day MA.  I suspect we will see this in short order.  Further support exists at the Fibonacci 38.2% retracement line at 17.49.  Silver tends to over-shoot and if it is going to find support around the 45 day MA, I think it will likely hit the 17.50 level before it turns back up.

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