Tuesday, July 23, 2013

Gold and Silver charts: an update

Gold Chart Pattern


Two weeks back on the 6 months daily bar chart pattern of gold, MACD and RSI were showing negative divergences by touching slightly higher bottoms in Jun ‘13 than in Apr ‘13 while gold’s price dropped lower. However, Slow stochastic didn’t confirm the negative divergence, so a rally was ruled out.

Bulls obviously didn’t care much for my analysis. Gold’s price rallied up to its 20 day EMA on increasing volumes. After a few days of sideways consolidation, gold has surged up to its 50 day EMA on good volumes, gaining 100 points in the past two weeks.

Daily technical indicators have turned bullish. MACD is still negative, but is rising above its signal line. RSI has climbed above its 50% level. Slow stochastic is inside its overbought zone. Can gold’s price move up some more? Sure it can. Is the bear market over? The falling 200 day EMA is suggesting otherwise.

Note that down-day volume on Wed. Jul 17 was the highest in the past two weeks. That means bears are likely to use every opportunity to sell. On the longer-term weekly bar chart (not shown), the 200 week EMA is still falling and gold’s price has spent 10 straight weeks below it. A long-term bear market is looming.

Silver Chart Pattern


Two weeks back, a couple of bullish signals were visible on the 6 months daily bar chart pattern of silver. However, the following cautionary remark was made: “..bullish signs deep inside a bear market should be traded cautiously. What appears to be a rally can turn into a sideways consolidation, followed by another drop.”

Though silver’s price has rallied above its 20 day EMA on good volumes, the past two weeks trading has formed a bearish ‘rising wedge’ pattern from which the price is likely to fall downwards.

Daily technical indicators are looking bullish. MACD is rising above its signal line in negative territory. RSI has moved above its 50% level. Slow stochastic dropped from its overbought zone, but has bounced up from its 50% level. Silver’s price may move up towards its falling 50 day EMA, but not much further.

On the long-term weekly bar chart (not shown), things are looking rather ominous for bulls. Silver’s price has spent 15 straight weeks below its falling 200 week EMA. The 50 week EMA is about to cross below the 200 week EMA. That will technically confirm a long-term bear market.

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