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Articles and Commentary

Weekend Gold and Silver Charts
By Chris Vermeulen
February 28, 2010

Three weeks ago, on February 5th, we saw an extremely high level of fear in the market with selling vs. buying volume at a 9:1 ratio. We note that in 2009 this extreme level of fear occurred at the bottom of each significant pullback.

Since this panic selling low in February 2010 we have seen stocks and commodities work their way higher, which we expected. Overall the broad market looks as though it's trying to make a move higher.

Below are some ETF charts of gold and silver.

GLD Gold ETF - Daily Trading Chart
Gold lead the market higher in 2009 and also lead the market lower in December of 2009. It looks as though gold could be starting a new trend higher.

You can see the clean breakout of the down channel and then a test of the channel at support. This type of price action also forms an inverse head and shoulders pattern for those who like trading patterns. :) This is very bullish price action.


SLV Silver ETF - Daily Trading Chart
Silver has much of the same chart features as gold but is slightly skewed. This is not particularly surprising though as silver virtually always behaves with less defined chart patterns due to its characteristically funky price action.


Conclusion:
Overall, last week started on a negative note but ended strong after forming a reversal pattern. It looks as though stocks and commodities have formed an ABC retrace pattern and are now ready to move higher.

How much higher you ask? Well, I believe 2010 is going to be a traders market. I envision an 8-12 month sideways consolidation (large bull flag) forming. If this materializes then buying on over sold dips, as we did on February 5th, and scaling out on strength at resistance levels will be our goal in the coming months.

A bunch of 4-8% trades is what I'm figuring but with leveraged ETFs we can double and triple those type of returns. Now that is something to anticipate with delighted optimism!

If you would like to receive my free weekly gold newsletter, please visit my website: www.TheGoldAndOilGuy.com.


TheGoldAndOilGuy.com is owned and run by me (Chris Vermeulen), an individual gold trading specialist. After sharing my gold analysis with friends, traders and financial advisors, I decided to make TheGoldAndOilGuy.com my full time job in 2003. This service was designed from the ground up to help individual traders who want to focus on consistent, accurate and profitable trades. Over the past ten years my strategy has been refined to one golden trading vehicle which has an almost 100% accuracy. The GLD (DGP and DZZ) gold exchange traded funds are now the most accurate trading vehicle I have seen, so it's my vehicle of choice. Members of TheGoldAndOilGuy.com not only get to trade my signals, but see my live trading charts and ask me all the questions they wish. My goal is for all of us to make money and have fun in life.


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