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Gold And Silver – Hope And Change From Last Week? Little Hope, Little Change
by Michael Noonan, Edge Trader Plus:
Was last week the start of something big? You be the judge of what the market is saying.
There is a reason and purpose why we always use and refer to the weekly charts, and the monthly at the end of each month. These higher time frames are more controlling over the lower time frames, particularly the daily chart upon which most rely. From the daily, many then choose to view the markets from an intra day perspective, as though a closer time frame will give better results. That is not the case.
Lower, intra day time frames are more problematic. One’s frame of reference is occupied with faster moves that require quicker decisions and often result in more losses than profits.
Quite frankly, many traders lack the discipline necessary, and even more importantly, do not have a detailed set of rules of engagement. It may seem tedious that we keep saying to wait for confirmation before making a buy/sell decision, yet the futures markets are dominated by highly skilled professionals and, just as often, cartels or even governments that control activity.
The daily fiat “dollar” chart serves as an example. Recent support was decisively broken with a wide range bar and on very strong volume. Typically, this is how trends undergo change. However, the FX markets are strictly controlled by the primary central banks, and very little trading information is provided by them, yet they see all buy/sell orders from all participants providing a huge advantage for the “house,” as it were.
No one can be certain of insipid Draghi’s impact on the market last Thursday that generated a huge increase in volume activity and equally huge losses for many traders. Is that volume a legitimate break of support that will change the trend, or is the volume climatic to the downside, over-extending the sell-off through support, triggering weak hands to exit, even some professionals caught on the wrong side, as well as resting stops being hit and new selling by computerized programs? If the latter, then last week could be nothing more than a bear trap where sellers will have to pay up to cover short positions.
