Looking at the PM-setups I can’t help feeling that by the month end a pretty mess is coming up to us again. In addition, on Monday the Americans will celebrate their Memorial Day. Do you remember what was going on in the Comex on Easter Monday during the last holiday trade? If you observed that trading live you will never forget it. At first silver was driven to the year high incredibly fast on Easter Monday, then followed the maddest twenty sell off minutes I ever saw. There were some wild bid-and-ask jumps – 50 cents… one dollar and more – up and down. I didn’t join gambling then – that seemed too savage to me. I just covered our long positions after opening as announced a day ago on Easter Sunday in the issue of GUNNER24 Forecasts of 04/24:
Yeah, and now comes another holiday and a month end again (window dressing?!). Gold and silver are in for some extremely important resistances. Let’s have a look at the 04/25 right away, to the silver top and the daily 3 Candle GUNNER24 Down Setup that is starting there:
We see a 4$ range – Spinning Top – and the release of the following 35% correction up to the low of 05/12. Below at the 3rd double arc we see a closing price beneath the 3rd double arc. A sell signal, that’s where we went short – last Tuesday we stopped out accepting a loss since silver set out to test again the 2nd double arc from below.
On Thursday a first resistance near the 2nd double arc being the red dotted resistance diagonal was reached. At first glance we only see red: the resistance diagonal we mentioned, two resistance horizontals, two resistance Gann Angles and of course the 2nd double arc.
All the important marks where the recuperation rally might end are registered in the setup. Since it’s really impossible to break through the 2nd arc upwards (closing price above the 2nd double arc) silver should rebound from one of those resistances diving downwards again.
Due to the holiday situation an important high may be marked as early as tomorrow. If Monday closes at the high we’ll have to reckon with an important high on Tuesday. In case of a daily close below 37.30 we’ll go short with target 31.50.
The described course of the correction – new test of the 2nd double arc with new rebound until down to the 3rd double arc and its break followed by a new low – is reasoned since there’s a sell signal on daily basis – the closing price of 05/17 underneath the 3rd double arc.
But IF silver succeeds in generating a closing price within the 2nd double arc or alternatively marking a high above 39.47 the existing sell signal will be canceled. In that case the 3rd double arc might not be going to be broken downwards any more, the final low might be reached at 32.30 already and in the course of the next two to three weeks silver might rather work its way upwards below/within the 2nd double arc until the 1*1 resistance Gann Angle will be reached at about 41.50.
The weekly Ugly Monster outlook:
By the closing price above the 4th double arc silver gave a hint that the scenario lately described (final low was marked with rising prices up to 41.50) might come true. To my mind however the 4th double arc is not yet broken finally since the lost motion hasn’t been overcome (explanation of the lost motion: http://www.gunner24.com/faq/trading-the-gunner24-setups/#c283).
All the same, for the time being silver marked another exclamation mark at least short term recapturing a Gann Angle (now a support Gann Angle). So it seems logical that silver wants to head for the resistance Gann Angle again. That one will be at 39.50 next week. If it were reached we’d have another positive sign! But all depends on the closing price of next week.
If the next week closing price is above the 4th double arc I’d see a significant weekly long signal since in that case the 5th double arc would be the next target. Of course, a closing price above 39.50 would be even a clearer long signal as in that case not only the weekly resistance Gann Angle might take matters into its own hand again as to the further course of the correction in price and time – a closing price above 39.50 would also mean that in the daily setup the existing sell signal would be denied. A clear rebound from the 39.50 and a new diving into the 4th double arc or a closing price below it would confirm the sell target of 31.50.
So silver will face the crucial decision next week. So will gold. The main target at 1545-1540 we worked out in the GUNNER24 Forecasts of 05/15/2011 is due. That shows us how dangerous the holiday and the month end will be. We have been positioned long since 05/20 after all.
Our entry was at 1513.6 and the main target being the 5th double arc is still a good day away. Covering is a little difficult now, just because of this holiday/month end scenario. The lower line of the 5th double arc is at 1548 for Monday, and that’s where we’ll cover in any case – if the holiday exaggerates upwards as seen frequently. If the holiday proceeds listlessly by reaching the lower line of the 5th double arc on Tuesday to Wednesday we’ll cover at any rate.
We’ll use the parallel existing daily 5 Candle GUNNER24 Down Setup for checking:
It permits a maximum of 1555, you know (this target would correspond to the 8 candle up of the upper line of the 5th double arc above)! On Friday the 1*1 Gann Angle was overcome. But it wasn’t broken clearly (lost motion!). As we supposed on 05/15 already the 1*2 Gann Angle might be the target. But it’s uncertain when it will be reached. There, at the 1*2, according to the rule # 19.3 we plan a conservative Gann Angle retracement short entry with a stop at the high of the last high candle.
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