Here is a chart from Tom Fitzpatrick at King World News that I thought put this into some perspective.
It is certainly worth reading his commentary, and I produce only his first chart with the rest to be seen at the source. With last night's selloff that correction is probably more like 35% or so but that does not alter the chart pattern. He also shows his long term chart on silver.
I took the liberty of circling the secondary cup and handle that was the consolidation before that last big leg to the upside top. This is what I was referencing last night. I had not realized at that time it was a 34% top to bottom correction. I was setting down to do the longer term chart today when I came across this, and it is well done.
That secondary cup and handle consolidation marked a big resistance level that thereafter became big support after having been exceeded.
I am waiting to see what happens here. This is a very 'purposeful' correction with selling that is blatantly timed to move prices lower in quiet markets. But the overall timing matches with the new lows in deliverable bullion at the COMEX and the TOCOM.
Big corrections like this are not unusual in bull markets. That huge correction in 2007-2008 cleared out the market and set up the move to the high.
I do think that such corrections represent 'asset stripping' by powerful and lightly regulated insiders and traders who have a free hand to obtain assets on the cheap after manipulating prices lower, and then allowing them to rise again. But who can say, except for someone like a regulator with access to the relevant information.
I do think that a turn, if it occurs, will coincide with the end of quarter mark to market. Perhaps that is too cynical. It is hard to imagine that one can be cynical enough after the serial frauds in market rigging we have seen in the past fifteen years.
These sorts of action disrupt normal market operations and allocation of capital that may inhibit future supply. But it is too much to think that these jokers would care as long as they are making money. Traders and private equity managers are often short term predators, and the environment in markets has become almost pathological.
One serious caveat is that since we are in a 'currency war,' at least to some peoples' thinking, one can only rely on market-oriented things like charts so much. As I said, the selling is obviously purposeful. And there are contentious issues being discussed by the world powers behind the scenes.
Source: King World News