Transcription
Hey folks, welcome to verified investing.com. My name is Gareth Soloway, chief market strategist here.
Now, in today's video, we're going to deep dive into the precious metals, gold and silver, specifically looking at where they are on the chart, what the forecast is for the next week or two. Are they still headed lower or are there signals that we're getting towards a major buyable bottom? Let's dive right into the charts right now.
So, first and foremost, one of the things we see is that silver did break down. We talked about this, guys. I had my $64 level support. We had talked about that for the last few months, how price kept on bouncing. But we also discussed in my last precious metals video how this was what we call a bouncy ball pattern. And again, just to refresh your mind here, when you have a support level and you drop a ball from the highest point, comes down, you get your second biggest bounce there, then it bounces less, then it bounces less, and eventually the bouncy ball pattern tends to break down. You can see that right here. Here's your first drop, your first big bounce, second drop, second bounce, which is lower, third bounce, and there's your breakdown. So, that's a classic technical analysis pattern formation that gave me the heads up that the support at 64 was eventually going to break to the downside.
Now, the question is what goes on now? Because we did pop up just a little bit in the past couple trading days. The key here is that this was originally support. It now becomes resistance. And you can see I've already labeled it as such. that the only way I would begin to say, "Okay, it's more neutral is if price can recapture this $64 level." For me to get bullish on silver, I'm going to need it to break out above this trend line right here. And again, notice this trend line from the all-time high to the secondary high here. Notice no other point along here touches the line. That tells me that's kind of the last bastion of resistance. That's the major res resistance point on the chart.
Now, we're looking at downside. Is there still more downside? Let's delve into the RSI and look at this. All right. So, the key is if you watched my video yesterday in crypto again. And remember, I always do these videos. Whether you like crypto, you hate crypto, whether you like precious metals, hate it, whether you like the stock market or hate it, there's always nuggets of extreme beneficial education in each and every one of them. So, we went into the RSI yesterday. I showed you how there's bullish divergences beginning to build on multiple altcoins as well as starting on Bitcoin, which could tell us with sentiment that maybe we're due for a bounce in crypto. And we'll see. Well, I gave the level where it fails and it continues lower. Ultimately, I still think it's going sub 50, but again, that education I want to bring to this video today.
So, first off, do we have any positive divergence on the silver chart? So, we know it broke down from technical support. Here's our last low and here's our lower low. Here we have a low on the RSI and a lower low on the RSI. So, these match, right? Lower lows. There's no positive divergence. For there to be a positive divergence on silver, we would need to see a higher low here on the RSI versus a lower low. It has to essentially go counter to what the chart is showing us. So that is telling us that silver is probably not at a bottom yet, especially because it's broken this technical level. Now, I do think it's possible, and this is usually how these charts play out. You could get a bounce back into that level, but then it now becomes resistance and price tends to fall.
Now, as you guys know, we've talked about where my key levels of support are on silver. First major support level is right here at around $54 per ounce. That would be your first technical level. Low pivot, low pi, or I should say high pivot, high pivot. And then if that breaks, you then go into a zone, which is what I'm really Listen, I'm going to start nibbling. And I already told you guys this, right? So, as a someone who watched silver go up to $110, $120 an ounce. And then I started shorting it and I started alerting people that it was eventually coming back to the 50s and possibly all as low as $50 an ounce. You know, I've been biting my time here. You know, I haven't been chasing this. I haven't been buying silver up here. But if we get down to 54 or pierce 54, I'm going to start to nibble. And the reason I'm going to do that, even though I think it can go as low as 50 or maybe the high 40s, like 48, 46, is because you never know where the exact bottom is. So, I'm not going to pretend to say this is the exact low. I'm going to only buy there. I do what I call the shotgun effect, which is spreading my buys out in my general vicinity. So again, while many people were buying at 110, $100, 90, 80, 70, 60, I've been able to hold back. But once we get in that 54 range, it makes sense, right? 54, maybe 50, maybe 46 or 48. I'll probably buy a little bit closer once we break or if we break $50 to accumulate my full position, dollar cost averaging because I still am long-term very bullish on the precious metals.
How can you not be when you look at what the government is printing uh what they're spending the Fed? And yes, you know, everyone's saying, "Oh, Kevin Walsh is hawk." No, he's not a hawk. He is not a hawk. Think about it. He's already talking about redoing the CPI data to exclude outliers. So, that tells us everything. Plus, the president was very clear. He was not going to appoint someone who was going to be a hawk, that he wants someone who will lower rates at the first sign of trouble. So, again, let's be fair on that. The idea is precious metals should generally trend higher, but they overshoot. They overshot. Gold, silver, overshot to the upside. Now they're going to overshoot to the downside getting down to this 50 45 46 level. And then that's our opp at least that's my opportunity, right? That's all we care what I'm talking about at least, right? It's just what I am going to do. But long story short, we do not have any positive divergence that tells us while we could continue to bounce unless we start taking out this upper level here. I'm going to remain steadfast looking for 54 or sub 54 to start accumulating on the long side.
Now, let's go to gold here. Is gold any different? And this is a little bit more intriguing to me. So, number one, we have this beautiful wedge pattern, right? I mean, this is just a fantastic wedge pattern. I love showing this how this high pivot, then you broke above it here, right? We came back, we retested. Then we went up and we kind of did this whole thing and we came down, retested and bounced again. Then we kind of retested here. We came down, we hit and there. And then we're hitting again. Right? So, we do know that this trend line has weakened because of so many hits. But it's still impressive how this trend line, you know, if people don't believe in technical analysis, it's like, okay, well, then why arbitrarily does price tend to bounce at this level? I mean, just give me the reason. I would love to know. But the point is again is that look down here. You have a low and a lower low, but a small positive divergence is starting.
Now, in general, for me to really be bullish, and we saw this on Bitcoin, right? To to to really think that we have a major bottom intact, I need to see a threepronged RSI divergence, okay? And again, that's going to be a new term to a lot of you guys. Um, but it's essentially going along the same idea as three peaks to a valley, meaning three higher highs before a bigger correction or three valleys, three lower lows before you get that correction. So, what I like to see in the RSI is a divergence three times. So, this is one, two, and so let's say we bounce up here, right? And then you get your little extension move up here. we get rejection and then we get one more positive divergence here with one more flush down to let's say that 39 or even 3500 level piercing this to the downside. This is your last wash out which brings us down to this key level right here which is the 3900 level. But really I'm I'm even isolating down potentially as low as 3500. We can see again all of these high pivots along here and we get that three-pronged positive divergence. So low, lower, low, lower, low, low, higher, low, higher, low, it's game on. And what I love is that it starts to mimic or match the levels on the chart. So you have this, if we could get down to this area here. And by the way, on gold, once we get down below 3900, I'm going to start to buy. Now, the 3500 is probably your downside target. But like I said, you know, I didn't buy when it was 5,000 or 5600 because that was euphoria and I'm strictly anti-using emotion to make major technical buy decisions or sell decisions. Frankly, I look at the data, the charts. That's what verified investing was created to be is a place where data and charts matter everything. Emotion can be on social media. Mainstream media pushes emotional responses so that they can get people to watch, so that they can sell ad spots, right? That's what it's all about. But for making money, emotion usually works in the opposite way. We get most fear at the lows and most greed at the highs. Okay? So the idea here is if we can get this, that is what I'm looking for on gold.
I do want to just mention here that if we go here and just take a look, we can very clearly see that the other factor that I want to just point out here and I want to just bring up my RSI one more time on silver here. So, let's bring it back up. And I have my again I have my moving average on here because it automatically comes up. But let's get rid of it here real quick. But the key here, there we go. We get rid of that. We switch it back here. And I like to have it a little bit bigger. Is going to your weekly chart. Look at how your weekly So 30 is oversold. And notice we're not even on silver to oversold. So this tells me that this probably has more downside to touch this level. And then if we go to the monthly, I mean the monthly needs to get to the 50 for a b for for a bottom. That's what I'm looking at. And the 50 actually works very much like a support level just like the 30 does and the 70. You can see how overbought. I mean people people were buying this so euphoric, but RSI was so extreme overbought. Look back over here. Look at RSI. I mean we were even higher here, but look at what that was. That was the top, right? And look at how it coincides. And so RSI can be useful. Again, the divergences are really what I look for, that triple uh divergence factor.
But if we go to gold here, I'll show you on gold. If we can get down to that 3500, where does gold go on the on the monthly, back to the midpoint at 50. On the weekly, same thing, down to 30. And that tells me again, it's almost there. I just need to see a little bit more on the charts. All right. A little bit more downside. And listen, in all fairness, I I you know, full and fair disclosure, I hold a fair amount of physical metal, right? So, you know, stored at some vault in who knows where. But the point is is that it's I already have exposure, right? So, for me, I can be a stickler. I can really say, all right, well, you know, I I got to get silver below 54, then I'll slowly accumulate to, let's say, 46 or so. Um, same thing with gold, right? I got my exposure to gold, so my long-term exposure. Uh but for me to add to those positions, that's what I need to see. And again, that's for me personally. Each person can do what they think is fair uh for their own situation. I can only speak for myself, but I thought that was interesting to look at the RSI, how silver doesn't have a positive divergence yet. Gold is beginning to. And if you asked me which one I like more, I absolutely like gold more long term because silver has an economic aspect, right? It's an industrial metal. And so if we actually do have a recession, let's say later this year or the inevitable recession, it makes sense that silver could underperform due to that factor, while gold could be the flight to safety trade. Little things to pay attention to.
All right, guys. Don't forget, join Gareth's Top Squad right here on um on YouTube. And again, this is my YouTube only. It's 10 bucks a month. It's a way to support my channel, to support everything we're doing here. if you find these useful. In addition, I did give out a coupon code yesterday in my membersonly video, which was a great coupon for a great discount on verified.com. So, if you do join, you'll get access to that coupon code in yesterday's video that I put out. All of these positives and again, more member only videos to come. Have a great rest of your day, guys. Enjoy. I'll see you soon. Take