Support and resistance for bullion on the market explained in this article.

This is a great article I got from another forum explaining how the support and resistance for bullion works for those who don't already know. I found it really interesting to see how basic it really is.
The bulls and the bears just like the stock market are fighting it out to move the market based on supply and demand. Read the article for a better understanding. All feedback is appreciated.

http://stockcharts.com/help/doku.php?id=chart_school:chart_analysis:support_and_resistan

 

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Thanks for posting the link I learned something. Just one little thing I like silver, but when silver went over thirty I quit buying rounds and bars, that does not make me a bear or a bull, the terms seem adversarial to me, and I continued to buy numismatic silver, the nice thing about the higher silver prices was that I saw a lot more variety when buying Junque silver.

 

Basically it comes down to how much the majority of investors involved want to own pm at this time in the chart, or not.

Some will misinterpret the "supply demand" for mining reports or silver institutes stats, and not see that the price of PM is not based on physical supply and demand changes, nor "inherent value, but by the investors who are actually buying ( increased demand) or selling ( increased supply). Excepting the small total amount of stacker and collectors, the majority seems to be strongly holding or selling. I don't see this level as either a buying or a selling opportunity (personally of course). YMMV

 

I always view support and resistance to be a combination of self fulfilling prophecies and human interactions with numbers psychologically. There might be some timing benefit, but other than that do not pay them much mind.

However, still a good background article OP, thanks.

 

Medora essentially hit the nail on the head. Support and resistance are psychologically derived numbers/estimates based upon assumptions about consumers.

Assumptions that create price supports:

-If I bought at a low price, and the price goes lower, all things constant, I will (if able) buy more.
-If the current price is lower than the price I bought at, I'll be unlikely to sell unless I absolutely need the money.

Assumptions that create price resistance:

-If I bought at a high price, and the price has been low for a while, I might try to "get out when I can" and "sell into the rally."

These assumptions are "super-charged" by computers which are programmed specifically to buy/sell as close to support/resistance as possible. Then, when/if support/resistance is pierced, they are programmed to do the opposite of what would have happened within the range.

Essentially, support/resistance are trend based assumptions for a price range. History/psychology tells us that commodity goods trade in well-defined ranges. Until those ranges are broken, the assumption is that you sell near the top of the range and buy near the bottom.

As always, precious metals (and most non-perishable commodities) are hedges against inflation and nothing more. The US dollar is going through a rally of strength that hasn't been seen since post-WW2. Nearly all major currencies are seeking refuge in USD. Even if QE continues in the US, the reality is that our version of it isn't as bad as other countries.