Gamble Blindly or Speculate Intelligently?

Silver has and will continue to lead the way once it (re)establishes what Livermoore described as the line of least resistance. This will be reveal by the strength of the tape. As expected, the upper trading channel has been formidable resistance for gold and silver. It has also become the line in the sand for the paper operators as they understand the technical implications of an upside break. This means that the battle for control over this line will be fierce.

Do you wish to gamble blindly in the hope of getting a great big profit or do you wish to speculate intelligently and get a smaller but much more profitable profit?, Jesse Livermoore.

The above quote hints at why gold and silver seem so indecisive at the upper channel resistance. While the pros are watching intensely, they have withdrawn from the trade in order to speculator more intelligently. The withdrawal of the pros and the holiday trading conditions means a sharp reduction in liquidity (volume) and discipline within the trend. In other words, price will be increasingly influenced by the weak hands of retail money and the actions of the paper operators.

While price has faded from upper channel resistance, it has yet to decisively break down. This suggests that the third tap of "three taps and out" remains in play. The labelling of the three taps will not be known until the tape reveals the line of least resistance.

Silver ETF (SLV):

Hi Eric,

On monday you posted "Silver will lead the way" ... but once it approaches the 30-level it gets hit ... and tumbles about 1.5 USD.

The chart - technical inidicators - looks very bullish these days ... Could it be that we see big moves the coming days or will shorters lead the way .

thanks to share your insights with us.

Barry