Bipolar Gold – $1400 or $1100 | Foundation to Stocks and Options

  • Posted August 9, 2013

Though the overall trend of Gold on the daily chart is Bearish, I currently have a Bullish bias in regards to the precious metals’ price action. All things considered, the metal can affectionately be referred to as “Bipolar Gold.” Bipolar disorder is a mood disorder where individuals experience episodes of a frenzied mood known as mania, alternating with episodes of depression. And there is little warning of a shift from one mood to the next. That sounds a lot like gold’s behavior, doesn’t it? If you suspect you, or anyone you know, may suffer from bipolar disorder, check out some self-help strategies, and books on the subject. But now, on to Bipolar Gold.up and down | Bipolar Gold - $1400 or $1100 | Foundation to Stocks and Options

So let’s discuss the many reasons to be bullish at this time about Bipolar Gold. Let’s look at why (technically) there is a good chance (versus earlier in the year) for a nice, short-term move to the upside. The low to mid $1400’s in the coming weeks could be realized! This should not be mistaken to mean that I feel a bottom of Gold & Silver has been permanently established. Though I do not care to “predict” tops & bottoms, I honestly do not feel that the lows are in. I opine that this is merely just a temporary pause for the metals to catch a breather……at least until the next bipolar gold mood swing.

Reasons for Bullishness on Bipolar Gold at this time:

  1. For the first time, Bipolar Gold significantly touched, traded, and closed numerous times above the downward channel created in April 2013.
  2. Bipolar Gold came within points of touching the top of the Bollinger Band (forgot to discuss in video), something it has not done in this recent downtrend on the Daily Chart.
  3. Gold has not traded this close to the Ichimoku Cloud ever since Jan 2013.
  4. Bipolar Gold has not been inside the cloud since Dec 2012, and closed numerous times inside the cloud. (The goal here is to have the metals trading above the cloud, which provides confirmation of short-term market trend reversal. The keyword here, however, is short-term.)
  5. Bipolar Gold’s V Bottom: V Bottoms tend to be quite powerful reversal-trend patterns, often yielding high momentum, which we saw shortly after Gold made it’s V bottom.
  6. Gold & Silver are both in a Bullish Divergence currently. Rather than MACD making a new low while the metals continue to make new lows, it failed to do so and made a high. Thus, selling momentum is drastically reducing. Usually when a stock/security goes in one trend for quite some time and divergence is present, it doesn’t always change trend when it initially occurs; Markets take their time and trends reverse at a random times. Coupled with this, when the trend finally changes, it’s rather abrupt and quick (like Gold/Silver’s V Bottom), which in-turn manifests into a V-Bottom.
  7. Metals are starting a “C wave correction” that is part of the “Primary 5 Wave”. If this sounds confusing, don’t worry. Ask the real expert, Jerremy Newsome of Tradesmart, on Elliot Wave, and he | Bipolar Gold - $1400 or $1100 | Foundation to Stocks and Options will explain it to you in an easy-to-understand way. Be sure to register for Tradesmart’s Free 4-week Foundations of Stocks & Options Level I class held online. While the class is in session, be sure to request at the appropriate time for him to analyze GLD when he asks for stock requests and also be sure to tell him that Vinny Patel referred you. I have a good relationship with him, and I know that he will be very honest with you in his teachings, as well as, opinions regarding his future outlook on Gold & Silver. He is an awesome Success Coach, Instructor and a trader; He knows his stuff, so be sure to continue, and ask him questions! You only have him for 4 weeks so ask away!

What To Expect in the Next Few Weeks from Bipolar Gold

Barring any unforeseen external event, geopolitically or otherwise……technically speaking, from now on, and over the next few weeks, you should see Bipolar Gold (and especially Silver since it’s already in a volatility “squeeze”) pretty much trade within a particular range and/or trade sideways. They both will go through a consolidation phrase and/or trade within or around the Cloud.

For silver, however, it is not looking that great. Unlike Bipolar Gold, Silver has lost its luster (for the time being). Because it’s lacking momentum, a lot of indecision and fear from buyers, as well as, lacking volatility, you currently see Silver trading flat and now in a “Squeeze”. Basically, this translates into a powerful move that is soon to come either to the upside or the downside. Traders use numerous strategies when trading squeezes, even when they do not know which direction the squeeze will “fire”. In regards to Bipolar Gold, it is not currently in a Squeeze, but the Bollinger Bands are creeping in, which tells us that a squeeze is near in the days and weeks ahead. Without going into the technicalities, when the bands contract, it usually stays this way for quite some time. It practically “suffocates” the volatility and makes it move sideways. The length of time for a squeeze varies; it can be as short as a few days, or as long as weeks upon end. When it’s ready to release, and when the squeeze “fires”, a powerful move occurs as a result. Also, it is not uncommon to see “head fakes” in both directions before going full-force in the initial intended direction.

What Direction Will the Squeeze “Fire”?

Because the direction of the Squeeze Fire is unknown, I argue many points in my Gold market video as to why I feel Gold & Silver have a good chance of still trading higher, as opposed to taking out its previous lows in the coming weeks ahead. Though anything is quite possible, and one can never be sure what direction the Squeeze will actually fire, I do honestly feel that probability is on our side to see metals finally take a decent move to the upside. Finally, I discuss some scenarios to watch out for during the squeeze fire, and how to prevent head fakes so you trade on the correct side.

What Does a Squeeze And It’s Ramifications “Look” Like?

Oh, and if you’re still confused as to what a squeeze looks like, take a look at the Silver chart (or Gold) and how it traded in March 2013 and the aftermath on April 12, 2013. If you want to know how it tried to do a head-fake to trick buyers & sellers, look at the price action during April 4 – 9th, 2013 before the Squeezed fired to the downside. This should give you a perspective as to how squeezes tend to look like and how powerful of a move they make on markets when it fires. Many traders profit quite substantially from such moves, and some make a living trading only squeezes (caring not that they get 100% of the move, but at least a good chunk of it). However, others who are not well-prepared, tend to lose a substantial amount. At times, squeezes may “fire” in one direction only to then reverse and go the other way with full force.

[editors’ note] Also, another person featured on this site, Gary the Numbers Guy, has been calling for a total market crash in the ‘not-distant-at-all’ future. For his exact date, you can find out directly from him and his associated sites, Stock Market Numerology and Equinox Algorithm. Obviously, any external force on the market would change the technical fundamentals, so always be in a position to adapt and react. [-T]

Finally, I would like to state that it is very risky when one trades against an overall trend. Here, we have metals in an overall downward trend, so even if there is high likelihood of a short-term uptrend as argued above, please be careful if you’re considering buying at this time. Use effective risk management strategies if you are going against the overall trend. I leave you with this saying “The trend is your friend until the very end”.

Please ask questions below or visit my YouTube channel if you have specific concerns or questions in regards to my comments and/or video.


[editor, Travis]