Weekly Hot Take - Deeper correction
18/09-22/09
Welcome everyone!
Hello everyone, and welcome to another weekly hot take where we discuss the precious metals market! Last week, we issued warnings to keep a portion of the PF in cash as there are sufficient signals out there that we might get another new low before we go up again in the metals market.
If you missed that update, click the link HERE!
This week, the pullback in broader markets is definitely starting and could continue for a while. Looking at the weekly SPY candles, I am expecting more downside over the coming weeks into a deeper ICL. Nonetheless, I’m expecting bulls to heavily defend these EMAs first as the bulls are in control above the weekly EMAs.
SPY
(Weekly)
How will this now affect the precious metals? Let’s find out more below:
Precious Metals
XAUUSD
(Monthly)
Gold is still above the monthly EMAs, barely hanging in there. Weekly and Daily EMAs have already been broken to the downside. Since we are at the important $1923 level, I expect lots of chop going forward, so that is why I prefer staying cash for a little bit longer till an appropriate risk-reward setup presents itself. The levels remain the same until we breakout or breakdown out of this range.
The range is $1923-$1974, a monthly close below or above any of these will signal the next trend. Keep it simple.
(Weekly)
On the weekly chart we can see that we bounced a bit after making a very slight undercut with RSI right in the middle of the range. This gives us no low-risk setup to trade on, which is why we will wait for further action. Remember that preserving/holding cash is also a position. There is no need to be in a position all the time; this saves a lot of mental space to think clearly. Seeing that there is an attempt at backtesting the weekly EMAs from below, if these can hold together with the $1923 resistance, then we can start looking at breaking $1893 and heading lower. On the other hand, I would only start to get bullish again above $1974, as that was the last major resistance. Also the direction of the US10YR will be telling.
(Daily)
Having a closer look at the daily tells me that we’re right on a decision point, as this chart seems rather neutral. Bulls are trying to get above $1923, and bears are trying to keep it below. To not prematurely take positions, we are waiting for clearer confirmation signals. The risk is just too great with the overall market that we might end this corrective wave with a flush, which would drag everything with it.
XAGUSD
(Monthly)
With 12 trading days to go, we can see the big decision that has to be made here. A monthly close above or below the EMAs will be the telling indicator for the next move. Overall, bullish arguments are that we are above the downward-sloping trendline and that we are right above (or on) the EMAs. The bearish arguments are the big red candle forming, the weekly and daily charts looking worse, and the failure to follow through on the big hammer candle last month.
(Weekly)
Up, down, up, down. Untradeable for a swing trade. Waiting for a clear trend to establish. Expecting us to flush out the three wicks formed around the $22.2 level. If Silver decides to break directly up, then we will switch stances again. For now, expect a flush and a reversal.
(Daily)
Same notes as on the weekly. Untradeable for a swing trade unless we get a trending directional move. I don’t see a profitable risk-reward setup in trading the metals here, so we are staying in cash. Also on the juniors part, I’ve announced that I reduced some positions to keep some extra cash. Still in some of them, just have a larger cash allocation to be able to move on good setups.
Thank you!
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Good luck!
GG