Gold And Silver: Trouble Brewing? Technical Analysis

Gold and Silver Technical Analysis – Gareth Soloway (Verified Investing)

Key Concepts:

• Technical Analysis: Analyzing price charts and patterns to predict future price movements.
• Trend Lines: Lines drawn on a chart connecting a series of highs or lows to identify the direction of a trend.
• Support & Resistance Levels: Price levels where a stock or commodity tends to find buying (support) or selling (resistance) pressure.
• Parallel Channeling: A technique used to identify potential support and resistance levels by drawing parallel lines based on existing trends.
• High Pivot/Low Pivot: Significant high or low points on a chart used for trend line construction.
• Intraday Highs/Lows: The highest and lowest prices reached during a single trading day.
• Relative Strength/Weakness: Assessing whether an asset is outperforming or underperforming relative to others.

Gold Analysis

Gareth Soloway begins by highlighting gold’s significant recent performance, noting a 3.5% increase on the day, reaching new all-time highs at over $163. He emphasizes a bullish signal derived from a breakout above a previously established trend line.

Support and Resistance:

• Support Levels: Soloway identifies two key support levels for gold: a minor support around $4650 and a major support at $4450. These levels are determined by drawing a trend line connecting recent lows.
• Resistance Levels: Utilizing parallel channeling, a trend line is drawn from a recent low, parallel to the existing trend. This line projects potential resistance around the $5000 - $5100 level. He notes the psychological significance of the $5000 mark for investors and market headlines.
• Minor Resistance: A minor resistance level is identified at the current price level, based on a previous minor high.

Trend Line Analysis:

Soloway differentiates between major and minor highs. A major high is characterized by a strong price run-up followed by a significant pullback, while a minor high exhibits less dramatic price action. He stresses the importance of understanding these distinctions when identifying resistance levels. He emphasizes that his analysis is based purely on technical analysis and aims to demonstrate how he arrives at his conclusions, not just what those conclusions are.

Silver Analysis

Soloway then shifts focus to silver, acknowledging its even more dramatic intraday move – a 36% increase from the start of the year to its intraday high (subsequently pulling back to around 33%).

Key Observation – Daily Close:

He highlights the importance of silver’s daily close relative to a previous high (matching highs from last Wednesday and Thursday). This close will provide a signal regarding the asset’s relative strength or weakness.

Support Levels:

• Soloway identifies initial support for silver around $84 to $85, based on previous highs acting as potential support levels. He draws a support line connecting these highs.

Resistance and Potential Correction:

• Using parallel channeling, Soloway observes that silver is encountering resistance. He notes that silver pierced a trend line but failed to sustain a close above it, suggesting a potential loss of momentum.
• He argues that, based on technical probabilities, silver has a higher likelihood of a correction or pullback compared to gold, even if gold continues to perform well. He emphasizes that while silver has defied gravity with its recent rally, the charts are now indicating resistance.
• He clarifies that technical analysis provides probabilities, not guarantees, and markets can sometimes defy logical expectations.

Soloway’s Trading Philosophy:

Soloway shares his personal trading journey, admitting initial struggles and emphasizing the importance of learning from experience. He states that technical analysis is a logic-based approach that aims to improve trading probabilities. He states, “markets can defy logic, right? Technical analysis is a logicbased approach which enables you to put the probabilities in your favor. But it doesn't mean just because probabilities are in your favor doesn't mean you win every time.”

Data & Statistics:

• Gold Increase: 3.5% increase on the day, reaching new all-time highs at over $163.
• Silver Increase: 36% increase from December 31st to intraday high, currently around 33% after pullback.

Logical Connections:

The video progresses logically from a broad overview of gold’s performance to a detailed technical analysis of support and resistance levels. The same approach is then applied to silver, with a comparative analysis highlighting the differing technical signals. Soloway consistently emphasizes the importance of understanding how he arrives at his conclusions, linking each step of the analysis back to fundamental principles of technical analysis.

Conclusion:

Gareth Soloway’s analysis suggests that gold remains bullish with potential upside to $5000, supported by key levels at $4650 and $4450. However, silver is showing signs of resistance and may be poised for a correction, with initial support around $84-$85. He stresses the importance of observing the daily close of silver to confirm these signals and reiterates that technical analysis provides probabilities, not certainties. The video provides a practical demonstration of technical analysis techniques, emphasizing the importance of understanding trend lines, support/resistance levels, and parallel channeling.