Waiting for the Breakdowns & Looking at Silver

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This week there are several trades we still need to keep track of. Our trading charts show several major opportunities are still out there as trends continue to develop. We will continue to watch the EUR/USD as it pulls back. At the same time, as gold prices continue to drop, it's also smart to look at silver. Therefore, in addition to discussing the EUR/USD, we will also look at both the silver and gold markets this week as well.

Looking at the EUR/USD currency pair

The EUR/USD is currently pulling back from its downward trend.  While there was a movement against the larger downward trend, this pair is already pulling back into the downward direction it was heading earlier. News coming out of Europe still is not good so that even a very disappointing jobs report from the United States was not enough to change the direction. One of the major concerns for the US recovery is the European debt crisis and recession. It is still questionable how this would affect the currency pair. Two obvious dangers are the overall Euro-Zone crisis as well as the end of the year “Fiscal Cliff” for the U.S. when the so-called Bush tax cuts expiring and mandatory spending cuts take place if a budget cannot be agreed upon.

The announcement of plans to recapitalize Spain’s banking system had surprisingly little effect on this currency pair. The EUR/USD only fell 0.07% on this news. To some extent this means the expense of this process has been already been figured into the currency pair price.

The brief countertrend to this long term downward movement already hit resistance. After hitting those resistance points, the price of the EUR/USD is once again heading down. There is little reason to believe that the Euro will come charging back anytime soon. For this reason, we are still bearish on the EUR long term. This is especially true against the US Dollar. This is why you need to hold on the EUR/USD and continue to short the Euro.

Taking a look at silver

While gold markets get most of the press, it is important to have a look at what is going on with silver. Many traders view silver as often riding the coattails of gold. This is mostly true, but silver deserves attention on its own. Silver is basically reacting more violently than gold right now when it comes to percentage of movement.

What does this mean?

This week, when gold moved down 2.6% because of the Fed’s moderate tone, silver went down a much stronger 4.1%. At the same time, the futures markets are actually surging. This is due to the idea that precious metals are going to rebound in the future due to current economic conditions. Some gold futures saw a 1% raise while silver futures actually saw a 4% rise. That is a huge difference and reflects a nice opportunity there for traders.

The belief here is that because silver could be quite a bit more volatile than gold, there is a good opportunity to trade this precious metal. If there are signs that gold could rebound, then there is a chance that silver could take off as well. On the reverse side, if gold continues to fall, then it is not out of the question to look at silver as also dropping and perhaps at a high enough percentage to make it even more profitable on the trade.

The long and short of it here is that silver is a precious metals market that is definitely worth following on the charts to see if these patterns continue.

We are still holding on gold

Gold gained value last Friday but then gave up a lot of that value in the following week.  Bernanke’s moderate-to-dovish stance is killing the idea of a stimulus that could help boost up gold again. Despite that recent gain, we still expect gold to continue to break downward in the long run. With more Euro problems cropping up, we believe this is still the best long term strategy and we are waiting for that Trend Finder arrow to appear.

So what does this mean to us?

Basically, we are watching these three markets for possible trades right now. We continue to watch gold with the belief that a breakdown in prices is going to happen. We are watching silver because of the way that market is shadowing gold. Finally, we are closely watching the EUR/USD currency pair. The news reports we see now seem to confirm that the Euro is in for a much harder ride than the US Dollar. Look for the EUR/USD to continue to fall.

EURUSD 15 Minute

As a trader of my Triad Trend Finder system, I’m able to catch moves like this on the lower time frame. We sold at 1.2556 risking 1.2586 and took profit at 1.2494. If you want to be able to grab pips on any time frame regardless of market direction, then you need to become a Triad Member.

EURUSD Week

Even though the EURUSD pulled back this week, we are still looking for it to move lower. Current stop loss is at 1.2975.

Gold

Still waiting for a Triad Finder arrow.

Silver

If Silver closes below our long term trend line with a Trend Finder arrow, then we are going to short silver.

Remember, in order to trade these markets effectively and profitably, you need system in place that can give an advantage. My Triad Trend Finder system can give you that advantage.

Good investing,

Jason Fielder

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One Comment

1. 

   Anne

   June 12, 2012 at 4:06 pm

   Indeed, 4.1% was a big plunge for silver, will be watching the price with interest in the coming days, especially in relation to the crisis in Greece right now.

   Your Triad Trend Finder system sounds interesting.

   Reply