Gold and Silver Rally Fading?

October 21, 2009

          For seven days so far, gold failed to break through $1065 resistance and silver has stopped short of $18. We've had a strong rally in gold and silver since the most recent bottom at the beginning of October. There is a small possibility that the metals can break through this resistance, but it is more likely that we've seen the top in this rally and a correction is coming.

          Unfortunately, I don't have time to create updated charts to include in this update. If you look at recent gold and silver charts, you can see that the 20 day moving average of $1030 for gold and $17.10 for silver are close to the bottom edge of an upward trend line that started in mid August. Breach of that trend line should result in further downside as speculative momentum traders exit their positions. We are long overdue for a healthy correction in the precious metals down to the 200 day moving average. I can't be sure that we will reach those levels soon, but I think we will see gold and silver retest their 50 day moving average of $1000 and $16.15.

          I recommend using trailing stop sell orders on long trading positions to protect gains accumulated in this rally. If gold manages to break out and close above $1065 for a few days, then my timing is wrong and this rally has more life. Personally, I am waiting for the next good buying opportunity which I expect by the end of November.

Best wishes on your future and investing and God Bless,

Timothy Silvers

www.silverbrothers.com

www.numisnetwork.com/silverbrothers

 

Disclaimer: This article represents the opinions and personal views of Timothy Silvers and is not intended to be investment advice. If you choose to use this analysis for your personal trading, Timothy Silvers assumes no liability for the direct or indirect losses you may incur due to using this article to make your investment decisions. You are totally and completely responsible for your own investments. At any given time, Timothy Silvers or his friends and relatives may have positions in silver related investments that may or may not follow the recommendations contained in this article. The information in this article may not be completely correct and accurate. Even though Timothy Silvers has done his best to review the content and accuracy of this article, he is in no way liable or responsible for any mistakes or omissions.