Weekly Hot Take - Resolution

2/06-6/06

Welcome friends!

Hello everyone, and welcome to another weekly hot take! I’m very excited this week, as we have finally had resolution from the sideways chop over the past few weeks. The catch is that it doesn’t look good for the bulls. But it definitely opens a lot of possibilities for us, as we have a lot of cash built up over the past few weeks.

Let’s dive straight into the report below, as there is a lot to discuss:

Precious Metals

XAUUSD

(Monthly)

As we can see from the monthly picture, the monthly candles closed below both EMAs, which, in our system, is very bearish as this implies a break of momentum in the long term. This breakdown or failure was a big probability; that is also why I signalled an alert a couple weeks ago and moved to cash. Generally, we should be moving into full bear mode, as we just broke these important EMAs for a monthly close. However, this is what happens often in the metals market, where they like to game the price action heavily. So we are going to zoom in to the weekly and daily charts to spot a first turnaround possibility for the bulls.

(Weekly)

The weekly chart speaks kind of for itself.. I never change lines to make it seem more bullish or bearish; this just looks much more bearish than I’ve wanted it to. For me, $1850 was solid support, and that is where it closed. This leaves me with two thinking paths. Our first option is that we are going to find a new ICL here pretty soon, as we have been declining for a long time. In the most bullish scenario, this will lead to an extremely violent bounce as the spring is being stretched to the downside here. In a more neutral scenario, the bounce will be sharp but short before we decline further. The second option here is that gold is moving ahead of some kind of credit event, which definitely seems like it is in the air. This would, of course, provide us with an amazing opportunity to deploy our cash if such an event were to happen over the course of the next few weeks. I think either two of the options will happen: a bounce real soon or a credit event. Don’t think we’ll slowly crawl up from $1850. It’s going to be extremely violent, either up or down.

(Daily)

Early in October, we had a severe decline as well, where the RSI was just as oversold. This leads me to think that there is a very violent bounce incoming. However, the evidence isn’t there yet to properly assume that a bottom could be formed here. As you should know, oversold securities can get more oversold in a liquidity event. But we all should be watching the charts next week, as it will be a very important week after this monthly close. I expect a temporary bottom to be formed anywhere between $1820 and $1850, and depending on the action afterwards, we will re-enter positions. This last expectation only holds if we don’t get a credit event.

Elliot waves are saying this is the C-wave of the wave 2 decline, cycles are pointing to failures, and an ICL is coming. The darkpools and blocks are still giving mixed signals, as long as we don’t see more signs of accumulation, we shouldn’t try to enter long, in my opinion. To be continued.

XAGUSD

(Monthly)

The monthly candle for silver also says enough, sadly. We had this extremely bullish candle last month, but right now we have the most bearish candle possible. What’s going to happen next? No one knows 100%. It is likely that we will wash out the stops around $22.2 and do a scary shakeout before we take off back to the upside. Thinking about a ball (full of air) that is being pushed underwater, this will release very violent energy to the upside when the time is there. I’m sticking to my $21.95 and $21.61 as potential turning points. Given the strengths of the bears, I am very much aware that breaking these levels is a big probability as well. For everyone that will try to catch this bottom at my support levels, I suggest going small and using stops. When the confirmation is there, you can add the size, as the next move up should be a long one.

(Weekly)

The weekly chart makes the picture even clearer. If I had to guess how this will look in 2 weeks, I think we will have a short spike down early next week and then a violent bounce. The spike down might go to $21.65 and then up violently.

If there is a credit event, then all lines are off, and we will have to watch institutional blocks a bit closer to see where they want to stop the bleeding. There is still lots of room for the RSI to move down or up. I’m expecting violence in both directions. If you aren’t comfortable, as I am, don’t take the usual position sizes and wait for some confirmation or clear signals.

Since we are making it a bit long here, I’m going to skip the daily as that is just a bit more zoomed in, and I’ve already explained everything that you should watch next week. I would definitely keep an eye out for the news events next week. If I decide to enter any long positions, I will update this on my private twitter for the paid subs.

Thank you!

I hope you all enjoyed the lengthy thoughts this week! If you want to further discuss this, feel free to DM me on Twitter or comment on one of my tweets.

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Stay safe out there!

GG