Friday’s session in the precious metals sector was very exciting, but quite a few investors will want to agree to that, because the volatility wasn’t really big. But the dam is broken, and we saw several new cracks pointing to an incoming breakdown. It’s not the time to look away from all the signs – it’s time to take advantage of them.

In addition to showing you how we plan to proceed with the above, we’ll discuss something much bigger – the dates at which gold, silver and gold miners are likely to reverse during the course of the year based on the technique that proves to be extremely useful over and over again.

We’ll start with the former.

Let’s see what happened in the gold market (charts courtesy of

Gold’s Downside Targets

One crack in the precious metals dam can be seen in gold. The yellow metal declined and closed the week below the rising dashed support line. The breakdown took place on volume that was a bit higher than what we saw on Thursday and Wednesday, which is a bearish confirmation. Naturally, the breakdown is not fully confirmed yet as there have been no three consecutive closes below the support line, but a weekly close and an increase in volume during the breakdown are already making it an important bearish sign.

The visible sell signal from the Stochastic indicator serves as another bearish sign.

The key thing that we can see on the above chart that has implications for the following days is the short-term triangle with the apex pointing to this week, which could indicate the time for a short-term reversal. It’s very good that approximately the same date can be seen for both the golden and silver triangles (see below) as it means that they confirm each other, and the entire prediction becomes more likely to become reality.

In the case of gold, we don’t have a medium-term self-similar pattern like the one in silver, so we assume that the current short-term decline is going to be similar to the previous short-term declines. We marked the most recent decline with a thick blue dashed line and the less recent smaller declines with thin blue dashed lines.

Other tools that we applied are the short-term Fibonacci retracements and the rising medium-term support line that we marked in red. The short-term Fibonacci retracements seem too close to the current price levels to trigger even a short-term rally at this time. Don’t get us wrong – this technique is very useful, but the key thing is that the retracements seem to have already worked and triggered a 1.5 month pause. After such a long pause, during which gold gathered strength for the next move, it seems unlikely that it would decline by only $30 or so. At the moment of writing these words, gold is trading at $1,317 (and the 61.8% Fibonacci is at about $1,287), so it seems that we should be looking for techniques that provide lower support targets.

The rising red support line certainly does. This line crosses the mentioned blue lines close to the $1,270 level and if we combine it with the apex of the triangle pattern, we get the picture in which gold is likely to bottom this week slightly above $1,270.

This creates the most likely short-term target area. However, there is also another target area that we marked that is not based on the mentioned apex of the triangle or the rising support line, but on the December 2017 low. It’s also supported by the size of two of the previous declines. Based on the above, gold is likely to form a local bottom in the $1,235 – $1,250 area.

Both target areas are additionally supported by medium-term Fibonacci retracement levels based on the entire December 2016 – January 2018 rally. The 38.2% retracement is at about $1,274 and the 50% retracement is at about $1,246. This makes the mentioned target areas even more reliable.

Please keep in mind that based on the similarity to the previous declines, the lower of the two mentioned targets is likely to be seen in the first half of April – this information will be useful in the following part of the analysis.

Incoming: Silver Slide

The crack that we see in the silver dam is the visible breakdown below the rising short-term support line and a move to the previous lows. That’s exactly what we saw in late November 2017. Back then, we also initially saw a tiny breakdown below the short-term support line, which was immediately followed by a daily decline to the previous lows. More or less the same thing happened on Friday. Consequently, the self-similar pattern in silver continues and everything that we wrote on this analogyremains up-to-date.

Based on the above, it seems that the decline in silver is already underway. We marked the starting dates of both declines: the current and the analogous one with red arrows. It’s not only the time relative to the previous developments, like the single-day price spike, which makes the analogy likely. It’s also the small breakdown below the rising short-term support line and a close below it that makes the two cases alike.

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