An interesting pattern across the gold universe is developing. Most of our positions are forming a pattern called a rising wedge, suggests Omar Ayales, technical trading expert and editor of Gold Charts R Us.
A rising wedge tends to signal an upcoming peak and pull back. Although price action is on the rise when the wedge is in formation, the rise tends to be slanted, signaling a loss of growing demand as price action approaches a key resistance level.
If the wedge is broken to the downside, price action will likely breakdown, possibly falling to a deeper uptrend & support level. More importantly, the rising wedge pattern is suggesting the ‘A’ rise peak is near and the start of a moderate ‘B’ decline could be shaping.
The price of gold is on the rise since the September‐November lows. From bottom to top, during the last 2+ months, gold has risen just over 12%. It reached the June 2022 highs & key resistance just below $1825.
However, the intensity of the rise has been moderating, pushing gold into a rising wedge pattern. The latest decline in gold is ready to confirm the rising wedge pattern, opening the door to a continued down move to possibly $1650, or lower.
This next down move could end up being the last one before a stronger ‘C’ rise begins. As we’ve been saying over the past several weeks, we must take advantage of upcoming weakness in gold and build up exposure to the gold universe.
Meanwhile, silver broke above the March 2022 downtrend & resistance — showing impressive strength. If silver now stays above the October uptrend at $20.50, it could then continue its bullish upmove. Silver’s next key resistance levels are the March/April highs near $27.
Silver’s leading indicator below is still bullish but approaching a resistance level showing momentum may be peaking. Silver and silver miners remain among the cheapest assets. Keep exposure built thus far and take advantage of weakness to buy new positions.
Agnico Eagle Mines (AEM) is forming a rising wedge pattern as the intensity of its rise diminishes, together with the rest of the gold universe.
If AEM now breaks below $50, it’ll confirm weakness that could open a down move to possibly the September uptrend near $45. The leading indicator below is under pressures showing weakness. We’ll be looking to buy new positions on a pull back below $47.
Hecla Mining Company (HL) broke above the Jun highs showing impressive strength. The stock then sprung upward, nearly reaching the $6 level. Hecla could now start to consolidate above its short-term support level at $5.
The leading indicator is at an extreme high and it could be drifting down soon as momentum wanes. Keep your positions for now and during some weakness and take advantage of weakness to buy.
Wheaton Precious Metals (WPM) has been on the rise, showing strength. However, as with most gold miners, the rise has been losing steam and could now pull back.
WPM is also forming a rising wedge pattern as it breaks below support. A decline to the September uptrend below $35 is now likely, and we'll buy some on a pullback to that lower levels.