Here is why technical chart analysis does not work (despite analysts swearing by it)!
Yes, I know that analysts have built entire business around technical chart analysis, but I’m here to expose the flaws of technical chart analysis today and why, many times, it simply does not work. We all know that in technical chart analysis, some indicators are leading and some are lagging. Think of technical chart analysis, on a whole, as a lagging methodology of analysis, with bankers leading price action by painting the charts like a a carrot on a stick, and not the other way around.
Last week I stumbled across a lot of articles online about why the gold and silver breakouts that happened were the ones we had been waiting for all year and why it was time to go “all in” on gold and silver mining stocks that you had been patiently waiting to buy. And certainly, if you look above at the technical charts for the Van Eck gold mining stock ETF, the GDX and for an individual silver mining stock, whose technical pattern was mimicked by many other silver mining stocks, it appeared that a legitimate breakout was underway last , and even more so with gold mining stocks.
If we look at the technical chart above for the GDX, we see that not only did the GDX gold mining stock ETF break above its 50 dma, but then it also formed a very bullish flag, broke higher from that technical formation, and then broke through its 200 dma. From a technical charting analysis, everything was in place for a continued much stronger move higher. Then what happened, why was the breakout above its 200 dma a false breakout, and why did the GDX crash back to the same level now as its breakout point from the bullish flag formation? In one simple word – manipulation.
During the first phase of the breakout, I actually suggested my skwealthacademy patrons open up GLD and SLV call options and they immediately rocketed higher by more than 100% and high double-digit profits after just a few days. However, due to the fact that I have always looked underneath the surface to assess if bankers are trying to cap gold and silver prices and take them down again, I immediately suggested closing out the positions after just a few days and taking the big profits due to pessimistic conditions I spotted developing in the gold and silver derivative markets. And this was the reason why I knew that the GDX breakout above the 200 dma was a false breakout and that the GLD would pull back below this critical resistance level again.
In fact, due to all the activity in synthetic gold and silver derivatives markets that precipitated immediately after the initial breakout higher, once gold prices hit $1,870, I told my skwealthacademy patrons that gold was likely to retreat to $1,840, then $1,800 and on 23 November, I informed them that gold prices were likely to head down to the $1,750 to $1,770 range. Likewise despite, the bullish set up in the technical charts for silver, and an initial surge in silver prices, I informed my patrons that silver would retreat back below $25 and keep falling until gold’s retreat stopped. Frankly, I don’t care what the technical charts ever “predict”, because as I’ve literally been stating for well over two decades now, technical chart analysis never “predict” future prices, and in fact, the exact opposite of this long-standing belief is true. Bankers paint the charts to move the sheep herd into behavior they desire regarding asset prices, and with gold and silver, a favorite tactic of theirs is to lure all the naive money into assuming long positions in the markets right before they execute a price slam, which they have executed over and over again with not only gold and silver assets but also with cryptocurrencies as well.
The only thing that matters, no matter how bullish technical charts may appear, are the actions of bankers in the synthetic markets. So if everything in technical analysis screams “buy” but my analysis of banker activities screams “don’t”, then I will wait. I always go with the manipulation game signals. And sometimes, because bankers have many manipulation tools at their disposal, one must develop a fell for when manipulation will happen. As an example of this, I specifically predicted that the CME would raise initial and maintenance margins on silver futures contracts on February to slam silver prices, as documented here, in which I stated in terms that could not possibly be any clearer:
“And mark my word, it is near guaranteed that the CME will be raising margins in gold, silver, platinum and palladium futures soon, perhaps really soon, if they fear a counterstrike happening in futures markets.”
This type of prediction is more difficult to make as it requires identifying “tells” of banker behavior in the synthetic markets that preceded other such margin hikes in past history. However, after I published the above article, the CME “regulators” stated “Damned if someone predicted our manipulation before we executed it. We’re still going to do it anyway”, raised silver margins less than 24-hours after I predicted they would, and caused a massive decline in silver futures prices. And such types of manipulation as I discussed in this article does not just apply to the precious metals arena but this statement also applies…
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