In this article, we analyze the gold and silver markets. In the chart, the daily Variable Changing Price Momentum Indicators (VC PMI) are on the left, while the weekly are on the right.

Gold

The daily price for gold is $1,477. The weekly average price is $1,479. The extreme level above the mean daily (Sell 1 level) is $1,487, while the Sell 2 level is $1,493. The Buy 1 level below the mean on the daily is $1,470, while Buy 2 is $1,459.

Let’s look at the trading targets for the daily and weekly. The weekly above the mean Sell 1 target is $1,494 and the Sell 2 level target is $1,507. The Buy 1 level below the mean is $1,465 and the Buy 2 level is $1,450.

If we look at the current market action, it is trading above both the daily and the weekly average prices, which means the trend momentum is bullish. The market is also trading above the descending trend line resistance at $1,480, which is also a bullish indicator. The VC PMI tells us that since the market is trading in the average daily and weekly price range, it means that there are no trades we would recommend for the futures contract.

“If you are in gold, continue to hold any long or swing positions, but I am hedging with DUST,” Equity Management Academy CEO Patrick MontesDeOca said. “I am locking in 50% profits so far year to date, so I want to see a little more validation. I want to see the market come off this distribution of supply area where we have been.”

The numbers point to the red zone on the chart, which the VC PMI identifies as distribution of supply. The algorithm triggers the signal when the level touches the key levels.

In gold, we are neutral to bullish, and for day trading, we are waiting for the market to go up to $1,487 and activate a short trigger. This could then lead to a reversion since the algorithm identifies a 90% probability of a reversion from that level.

In the meantime, we are watching the market. If it goes up, we’ll watch what it does. We have locked in profit in this range, so we are not missing much. We took a hedge on our long position. The ideal place to enter would be, if you want to go long, to wait for the market to come down to the mean of at least $1,470 daily. The weekly mean is at $1,465. The market is building a level of demand below $1,470, $1,465, $1,459, and $1,450, which is a combination of the daily and weekly signals. They identify where the demand is. Wait for the market to hit those levels and then the artificial intelligence of the VC PMI will tell us what the market will do.

Silver

Silver traded last at $17.09 and is up 7 or 8 cents. We have completed the target of the Sell 1 level on the daily up to about $17.11. We have tried to close above this level at 11:15 or 11:30 am (PST) on the 15th of December and activated a short trigger from $17.05. The stop was $1,711. Automatically, the VC PMI tells you to put your stop above on a short trade using the 15-minute bar. The trade was not stopped out and came down to a low of $17.01, for a 9-cent profit from $17.10 with a half-cent risk.

When the market gives you the luxury of going in your direction, if you don’t want to get out or it didn’t meet the target, the best thing to do is trail the market with a stop. Use a dollar stop of your choice. Every trader is different, in part depending on your size. It is important to customize your objectives according to your size, risk tolerance, and profile.

The market came back up to test $17.11 and did not have enough buyers to offset the sellers in this area of distribution of supply. It then gave a short signal again at 3:30 am (PST).

The algorithm has been activating short signals in silver from $17.11 all night. It has not been able to get through $17.11. It looks like – trading last at $17.10 – silver will test that extreme level above the mean. As I write, the target was completed. Now, the signal will go neutral. It will activate an alert to prepare for the close of the next bar. If the price closes below $17.11 at the close of the next bar, it activates a short signal. This is the set-up bar or an alert. The complete bar all the way to the close is the set-up. The close of the set-up above or below $17.11 will give you an idea of whether it is bullish or bearish. The conservative trader will wait for the close of the next 15-minute bar to activate the next signal. If the market closes at $17.11 on the close of the next bar, do nothing. If you go long from there, there is only a 10% chance of a profitable trade. If you go short, there is a 90% chance of a regression back down to the mean. Again, if the market closes above that level, do nothing. This is the daily signal that has been activated. The market opened lower than $17.11, which meant a bearish setup. The close of this bar would activate a short signal. If you want to do multiples, take a short position here. Sell one at the market. If the market closes above $17.11, you get stopped out. If it closes below, add another short position at the market.

In silver, we are short one position with a stop at $17.11 on a close above. On a close below, we plan to add another short contract in silver.

To learn more about how the VC PMI works and receive weekly reports on the E-mini, Grayscale Bitcoin Trust (GBTC), gold and silver, check out our Marketplace service, Mean Reversion Trading.

Author: Seeking Alpha Staff

Source: Seeking Alpha: Shorting Gold And Silver Short Term

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