Tuesday, April 24, 2012

Gold and Silver chart patterns: an update

Gold Chart Pattern


Gold’s price is pretty much where it was two week’s back. In between, a mini rally didn’t attract much follow-up buying and met with strong resistance from the falling 50 day EMA. Bears are selling at every rise, and gold’s price has once again dropped below the 200 day EMA. A bearish pattern of lower tops and lower bottoms continues. The 20 day EMA is on the verge of crossing below the 200 day EMA.

The three technical indicators are bearish, but showing positive divergences. They touched higher tops while gold’s price chart reached a slightly lower top. But the sentiment has turned negative, so any up move is likely to attract more selling. A bear market is looming.

Silver Chart Pattern


The following observations were made in the previous post: “Silver’s price chart pattern shows a consolidation within a rectangular band between 31 and 33. Consolidation patterns tend to be continuation patterns, which means the price should break down below 31 sooner than later.” A break down occurred on Apr 23 ‘12. A pullback to the 31 level is likely.

Silver bulls should be concerned about the high volumes on the break down. Note that several down days during the past two months have been accompanied by high volumes, which is a sign of distribution from strong to weak hands.

All three technical indicators are bearish, and pointing to a deeper correction. The three EMAs are falling and silver’s price is trading below all three EMAs. Bears are ruling. Stay away.

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