On Wednesday, both Gold and Silver tried to breakout to the next levels. Both were cruising along, trading above their resistance levels, but once again the rallies appear to have been put down. This morning both are trading back below those levels.
This type of trading action is common when a market is getting ready to make a much bigger move, a couple of false breakouts followed by a return to the top or bottom of the range. In the case of the metals, both are trying to breakout to the upside, we are expecting a test of the bottoms, 1280-1290.
As we often write, the consolidation is the time of most confusion, forcing traders and investors to make bad decisions as they try to catch the move before it confirms. This time is not different and as traders we will stay short until we have proof that they are breaking out to the upside. As investors, we will hold our long positions because investors should not be trading, they are investing.