Tuesday, June 18, 2013

Gold and Silver charts: an update

Gold Chart Pattern


The 6 months daily bar chart pattern of gold continues its sideways consolidation in a bear market. A similar sideways consolidation in a price range between 1550 and 1625 during Feb-Mar ‘13 had ended with a high volume ‘panic bottom’ pattern.

Since a ‘panic bottom’ seldom holds, gold’s price is likely to seek levels lower than its Apr ‘13 low. Daily technical indicators are looking bearish. MACD is rising above its signal line, but remains in negative territory. RSI is moving sideways below its 50% level. Slow stochastic is sliding down below its 50% level.

Higher volumes on down days is a sign of distribution. Avoid the temptation to do any bottom fishing. Enter only on a convincing move above 1500.

Silver Chart Pattern


The 6 months daily bar chart pattern of silver is consolidating sideways with a downward bias. The falling 20 day EMA is providing strong resistance to all attempted up moves since Feb ‘13.

Daily technical indicators are bearish. MACD is above its signal line, but inside negative territory. RSI continues to drift below its 50% level. Slow stochastic has bounced up weakly from the edge of its oversold zone.

Only a revival in worldwide industrial production can change the fortunes of silver bulls. Stay on the sidelines till then. Enter only if silver’s price convincingly crosses above 25.

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