BIGGER PICTURE levels in gold and silver

I gave you a shorter term view of silver earlier today.  Let’s a take a look at the bigger term implications using the bull market lows as a starting point.

First gold. The chart is annotated so feel free to click on it for a larger view.  Note that if we take the Fibonacci retracement levels from the entire move from the $255.80 low in 2001 to the $1923,79 highs registered in 2011, the first Fibonacci retracement level and thereby the first real area of STRONGEST support sits at $12.75 which is why I keep using that as my downside target in my tweets. I would personally love to see another wave of selling to test that level to really be confident that some sort of lasting bottom is in place.  Note that a failure of that level would see selling to the next support zone of $1,080 which is the 50% retracement of the entire bull market advance.  Note however that until then, the market likes to use round numbers as support so $1300 is a good first level of support. Note, if the market strongly rejects 1275 and turns higher, we may see a significant rally that could challenge the old highs but keep in mind there will be strong resistance along the way at all broken support lines as I identified in my previous charts.

Here’s silver bigger term view:  Silver is a bit more problematic in that man of its Fib support levels have already been compromised and the last one that remains sits at $21.66.  Again, I would prefer a test to form a proper base and like gold, should that area be flatly rejected, a move higher, a significant one at that could unfold. A break of $21.66 support though could see prices rapidly decline to 20, 19 and then the $17.50 area which is the last level of support using the retracement from the 2009 breakout which is marked in green on the chart. Silver has the greatest bearish potential of the two metals as a result of this activity when analyzed on the monthly chart from the start of the bull market.

Trading will remain volatile. Use your levels and stops wisely.