The following report was published for our subscribers April 25, 2011. Technical observations of RossClark@shaw.ca
Gold - Another Goal Achieved
Silver - Into a Rare Position
Gold reached its minimum upside target of $1515 over night, based upon measurements from the March 15th low of the consolidation of November through April 4th. A correction should find support between the 20-day and 34-day exponential moving averages (currently $1469 and $1451). The optimum target for this leg of the bull market remains $1580, based upon the measurement from the January 28th low.
Silver prices have been advancing relative to gold since August in classic bull market fashion. In that time they are up 175% versus a gold move of 31%. The ratio has its most overextended monthly RSI(14) reading since January 1980. We expect to see the GSR find support at 30:1 and 26:1 (a silver/gold ratio of 3.3% and 3.9%).
Silver is into Upside Exhaustion mode in all three time frames; daily, weekly and monthly. There have been five previous occurrences since 1964. Any downside break of 10% from the high will indicate that the runaway phase is at an end and a violent initial decline back to the 34-day average is likely. A 50% retracement of the rally from the $18 low in August coupled with simultaneous daily RSI(14) readings below 50 in gold and silver is common at corrective lows within two months of the high.
The action is close enough to our optimum window for a high (April 27th through May 6th) to suggest that the frenzy is virtually complete.
Silver - Simultaneous Upside Exhaustions in daily, weekly and monthly charts
April 26, 2011 | March 3, 2008 |
April 13-19th 2006 | January 2nd to 18th 1980 |
September 4, 1979 | February 8th to 26th 1974 |
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