Tuesday, June 4, 2013

Gold and Silver charts: consolidating before the next fall?

Gold Chart Pattern


The 6 months daily bar chart pattern of gold dropped to a high volume ‘panic bottom’ in April, and has since been consolidating within a broad range between 1300 and 1500. Note that the falling 20 day EMA has so far been providing resistance to all attempts by gold’s price to move up.

Gold’s price is clearly in a bear market – with the 200 day EMA and the 50 day EMA both falling. The strategy to follow in a bear market is to sell the rises, instead of hoping that gold’s price can’t/won’t fall any lower and therefore, this must be a good time to enter. ‘Panic bottoms’ seldom hold; gold’s price is likely to fall below the Apr ‘13 low.

Daily technical indicators are showing signs of bullishness. MACD is rising above its signal line, but remains in negative territory. RSI has been trying to move above its 50% level for the past 2 months, but without any success. Slow stochastic has climbed above its 50% level. However, any further up move from here may lead to bear selling.

Silver Chart Pattern


The 6 months daily bar chart pattern of silver shows consolidation within a narrow range between 22 and 23 during the past 2 weeks. Higher volumes on down-days indicates distribution. The likely break out from the narrow range is downwards.

Daily technical indicators are showing some signs of bullishness – particularly from the Slow stochastic, which is rising above its 50% level. However, MACD is negative, and RSI is below its 50% level.

For the past 4 months, silver’s price has faced resistance from its falling 20 day EMA. It is trading below all three EMAs and is in a bear market. Lower levels are likely.

No comments: