Monthly Charts Argue for Lower Prices in Precious Metals Complex

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Published : October 02nd, 2016
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Category : Technical Analysis

The trading month doesn't always end on a Friday but when it does we like to take a look at the monthly charts. Generally, I prefer daily and weekly charts because they have more data points. However, monthly charts carry more significance than weekly charts which carry more significance than daily charts. You get the point. One reason and a good reason we expect the current correction to continue is the sector monthly charts.

The chart below plots the monthly candle charts of GDX and GDXJ. Earlier this year the miners exploded above their 20-month moving averages and into a new bull market. They were trading at three year highs before a bearish reversal in August that reversed the entire gains from July. September saw a recovery but failure to hold most of those gains. This tells us that selling pressure remains present and miners will likely see lower prices in October.

24hGold - Monthly Charts Argue...

The metals show a similar picture. Markets moved well above their 20-month moving averages but the August candle engulfed July's candle while September recovered only to a small degree. That implies lower prices in October. Gold has support around $1290 while Silver has support near $18. Like the miners, the metals remain a healthy distance above their rising long-term moving averages.

24hGold - Monthly Charts Argue...

The monthly charts and in particular the action of the past two months leads us to believe lower prices in October are more likely than not. The monthly charts obviously take more time to develop (we have to wait an entire month) but they are the most significant. Time will tell but we see the potential for an important low in October. Traders and investors are advised to wait for lower prices and an oversold condition. We will focus on opportunities scattered amongst individual companies.

Data and Statistics for these countries : Georgia | All
Gold and Silver Prices for these countries : Georgia | All
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Jordan Roy-Byrne, CMT is a Chartered Market Technician and member of the Market Technicians Association. He is the publisher and editor of TheDailyGold Premium, a publication which emphasizes market timing and stock selection, as well as TheDailyGold Global, an add-on service for subscribers which covers global capital markets. He is also the author of the 2015 book, The Coming Renewal of Gold’s Secular Bull Market which is available for free. TheDailyGold.com was recently named one of the top 50 Investment Blogs by DailyReckoning and WalletHub.
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