As Dollar Poleaxing Continues, Silver Takes Off

Tyler Durden's picture

As the dollar is getting its daily dose of poleaxing, the natural currency substitutes do their usual thing.

And some updated thoughts from FMX on the next steps for gold.

Gold Momentum Indicator Triggered. Breakout Imminent above $1412.00

Last week we stated that Gold was on our radar to trigger a move higher using our Trend-Vol system, possibly as high as 1550 within 8 weeks.  The indicator combines implied, historical and Bollinger Band levels into an oscillator that generates volatility based risk-reward scenarios. Last week, we had to settle above 14.15 for the trigger to go off. It did not. But this week the number is 1412.

Each oval below was a trigger moment. We are at one of those now.

http://www.fmxconnect.com/fmxmetalsconnect/image.axd?picture=WindowsLiveWriter/GoldMomentumIndicatorTriggered.Breako.00/10C5344F/clip_image001.jpg

This week the market has to settle above 1412, which we are currently over. The alert is triggering. This is a weekly settlement price to be a true trigger, but we are not comfortable waiting for Friday’s settlement. We are also not interested in disobeying our own rules too much. So here is our compromise.

Here is what we are doing in our personal accounts:

1. Every day we settle above 1412 we are buying into 20% of our position with expectations of being fully “in” by Friday. (We prefer options)

2. If we settle under 1412 on any of these days, we won’t add

3. Consider decreasing or closing positions if we settle under 1412

4. The signal will be negated if we settle under 1412 for the week.

This system  uses volatility to determine if a move will follow though. It tries to catch the moment when volatility is reversing. Expect to buy into strength if it is right. Buying dips is not a good sign.

If we get a settle above 1412 this week, there is a high likelihood of a strong follow through to the upside over the next month starting with an initial spike higher 2 weeks from now.

Once this week is over and  if we have our full position on, our stop loss will be the previous week’s settlement area of 1409 settlement

Good Luck.