Don't Buy into Shooting Stars; Enter 'True' Longs @ 1380ish
Updated
A lot of people confuse shooting stars and dead cat bounces with 'real' runs - both in stocks and metals. Right now, we are seeing and have been seeing shooting stars in Gold for a little while and we have received another one. Silver has recently formed a shooting star as well.
What this means is we can expect a likely breakdown once again in Gold to sub-1450 and Silver likely sub-11 for cash (liquidity) and more margin covering sometime early next week.
The generational buying opportunity in Gold, Silver and eventually Platinum is coming, however, refrain from buying into these shooting stars that are simply filtering out weak bulls.
There will continue to be more strength in the DXY up to at-least the 108 range which will further the selling pressure on Gold, and we are certainly not near the equity lows before stabilization. Both of these will add to selling pressure in Gold and Silver. With most of the world essentially shutdown, there is little to no industrial necessity for Silver, and as such, I see Silver's current rise as nothing more than a dead cat bounce.
At this point and as I have been calling for a little while, Gold will come to test its pre-breakout levels which is at-least the 1390-1400 range. It is possible it can find support from the top of the elongated 6 year cup which is closer to 1350. However, I would begin entering large buys around the 1390-1400 rather than "hoping" for something that may not come.
- zSplit
What this means is we can expect a likely breakdown once again in Gold to sub-1450 and Silver likely sub-11 for cash (liquidity) and more margin covering sometime early next week.
The generational buying opportunity in Gold, Silver and eventually Platinum is coming, however, refrain from buying into these shooting stars that are simply filtering out weak bulls.
There will continue to be more strength in the DXY up to at-least the 108 range which will further the selling pressure on Gold, and we are certainly not near the equity lows before stabilization. Both of these will add to selling pressure in Gold and Silver. With most of the world essentially shutdown, there is little to no industrial necessity for Silver, and as such, I see Silver's current rise as nothing more than a dead cat bounce.
At this point and as I have been calling for a little while, Gold will come to test its pre-breakout levels which is at-least the 1390-1400 range. It is possible it can find support from the top of the elongated 6 year cup which is closer to 1350. However, I would begin entering large buys around the 1390-1400 rather than "hoping" for something that may not come.
- zSplit
Note
Gold has sold off just like I suspected. We formed another shooting star on open to roughly 1508 and it sold off sharply.
Once a stimulus package is passed this could reverse, HOWEVER, all rallies in Gold (and equities) will be sold due to the overall environment, including that of the strength of the DXY.
Do not fall into the trap of buying into shooting stars.
Trade closed manually
POSTED UPDATED IDEA. TARGET WAS REACHED AT 1478-1480 OVERNIGHT IN FUTURES.
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