Two of the best looking sector charts that I am seeing currently are in precious metals (gold/silver) …
Gold ETF (GLD) Monthly Chart
You can see that the monthly chart for GLD has been in a big down trend off of the 2011/12 highs … April 2016 saw price close above the ATR resistance level of $122.56 and price has been basically consolidating for the past 16 months. Key for me when price breaks an ATR level and warns me of a possible change in the trend direction is that price consolidates and “accepts” that ATR break. I would argue that price is looking like it has accepted the break higher and I suspect the next big trend will be higher for gold.
Silver ETF (SLV) Monthly Chart
The Silver ETF monthly chart looks pretty similar to the gold one, and it too looks like it has been consolidating its break of the ATR resistance level. SLV didn’t break its ATR until June 2016, but it also looks like it is completing a consolidation wedge pattern on the monthly time frame.
Gold ETF (GLD) Weekly Chart
I’ve been tracking how GLD was handling the testing of the upper resistance line in the downward broadening pattern and I actually started a small starter position in GLD recently as it is showing strength, or at least a lack of wanting to head back lower at these levels. Last week saw price for the GLD ETF complete an inside candle, which can often turn out to be a consolidation candle that you can find before price starts off on another expansion push.
Silver ETF (SLV) Weekly Chart
The SLV ETF has actually made two back-to-back inside candles that also turned out to be bullish momentum hammers. Basically, each of the last two weeks saw price open, and push lower, but buyers stepped in and refused to let price head lower. This could turn out to be a pretty bullish signal that price is about to start an expansion phase higher here next week. $16.28 is the high of the past three weeks, so if price takes out the $16.30 level next week and can hold it for a couple of hours intra-day, I like the chances of SLV moving higher here soon.
The next logical area where SLV should push up to is that median line of the broadening pattern … that level is at about $17.75 vs the $16.11 close on Friday.
Gold ETF (GLD) Daily Chart
Look at that bullish price action on Friday … huge volume of 12.4 million on a day where the bears tried to take price lower, but the bulls stepped in to close the ETF near its highs.
Silver ETF (SLV) Daily Chart
Man, SLV has spent about 15 days or about 11 candle bars pressing against the upper resistance line on the daily chart at $16.28. To me, it looks like silver wants to go higher here soon.
Silver 2x Bull ETF (AGQ) Daily Chart
Once SLV has convinced me it is starting to move on that bigger time frame pattern, the 2x bullish ETF AGQ is the way to get some good exposure to Silver.
Silver Futures Weekly Chart
Silver futures are also a way to play an expansion phase that may be in the works here over the next little while.
Bottom Line … base metal prices as a whole have been on the move the last little while, and that be a sign of investors finally waking up to a possible global economic expansion. If that is the case then, the thoughts of inflation and gold/silver are often quick to follow. This asset class needs to be watched more closely going forward into the fall.
Cheers … Leaf_West