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We recently used the Equity Management Academy’s proprietary Variable Changing Price Momentum Indicator (VC PMI) to analyze several markets. In gold, the artificial intelligence algorithm recommends accumulating long positions at the B1 and B2 levels of $1,214 and $1,217. Silver came down and activated a buy signal at $15.31. Gold and silver appear to be building strong foundations for major moves up. In crude oil, buy into corrections. In Bitcoin, we are waiting for the market to activate some buy signals.

Gold

gold futures

Gold last traded at $1,223.40, up $3.50. The average price based on the VC PMI is $1,221. The market overnight came down to activate a buy signal (B1) of $1,214 at about 10:45 pm. The market also activated a buy 2 level at $1,217. The target of the average price of $1,221 was completed, and the sell 1 (S1) level of $1224 was completed. The sell 2 (S2) level is $1,228, which was challenged on August 3.

We have been trading from the low of $1,212.50 made on August 3 to the extreme above the mean of S2 at $1,228. Therefore, we’ve been in a $14 range since August 3. I’ve been suggesting in previous reports that in the gold and silver markets you should use these corrections into the B1 and B2 levels to accumulate long positions. Use the levels of supply or resistance to lock in profits.

If gold closes above $1,228, it would be breaking out above this consolidation pattern that we have been in since August 3. If we close above $1,228, it would change the structure as laid out by the VC PMI to a higher fractal of price. The resistance below those levels would then become support.

Silver

silver futures

Silver traded last at $15.42, which was slightly lower, down 4 cents. The average price according to the VC PMI is $15.46. Silver came down overnight to the B2 level of $15.31, at about 11:15 pm, and activated a buy signal. The B1 level is at $15.39, and now, the market has activated another buy signal with a target of $15.46. If you’re day trading, we always recommend, for short-term risk, to use the $15.39 level as your stop on a close below using the 15-minute bar.

Crude Oil

crude oil futures

Crude oil traded last at $67.50, up about 67 points. The average price according to the VC PMI is $66.90. The market has come down to the B1 level of $66.40 over the past couple of days. Last night’s low of $66.14 activated the B1 level. The second target above the average price of $66.90 is the S1 level of $67.32. The S2 level is $67.82. I now recommend, as crude oil appears to have found support into these areas, to buy corrections into the B1 and B2 levels.

Bitcoin

Bitcoin futures

Bitcoin traded last at 6,425, down 35. The average price based on the VC PMI is 6,415. The market is trading around the average price, which means the market is neutral. The extreme below the average price is 6,285, and the B2 level is 6,060. With the market making a low of 6,105 a couple of days ago, it activated the B1 level of 6,285. Then, the market reverted back up through that average and has been trading around 6,415 (the average price) for the past couple of days. What we are looking for in Bitcoin is for the market to give us the opportunity to activate the B1 or B2 signals.

Conclusion

As we conclude this week, in gold and silver, the market has found a floor. In gold, the floor is in the $1,214/ $1,212 to $1,217. In silver, the floor is in the $15.25 to $15.40 range, which appears to be a major area of demand. Every time the price of gold or silver comes down to these levels, we see a reversion, as expected. The only thing that is missing here is some kind of a volume to come in here, and shorts begin to cover their positions and for the momentum of the markets to turn bullish, which we expect to happen over the next few weeks. I am comfortable that gold and silver are holding these levels. It’s a question of time now for the energy of the market to develop these levels as stronger foundations, aligning themselves with the weekly and monthly signals to support a higher price fractal. If you look at the chart from 2011, we can clearly see that we’ve been in a consolidation phase for gold and silver since that 2011 high was made. We are seeing a major level of support being built in the precious metals market, which will support a much, much higher price level. The way to look at the consolidation phase of a market is to think of it like the foundation of a building. If there is a weak foundation, you can expect that the building won’t hold up. The stronger the foundation, the stronger the building and the stronger the position and trend up that will be better able to withstand any challenges to that trend.

Summary

  • Gold and silver appear to be building strong foundations for major moves up.
  • Buy gold and silver on corrections and accumulate long positions.
  • Crude oil has found support, so buy into corrections at the buy 1 level of $66.40.
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