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Tuesday, December 3, 2013

Gold and Silver charts: bears tighten their grips

Gold Chart Pattern


The 6 months daily bar chart pattern of gold is looking rather ominous for bulls. After consolidating within a small rectangular band between 1235 and 1255 for a few trading sessions, gold’s price broke sharply downwards.

The downward break out was on expected lines, as rectangle patterns tend to be continuation patterns. A test, and possible breach, of the Jun ‘13 low of 1180 is on the cards. If the breach of 1180 does happen, gold’s price can fall to 1000.

Daily technical indicators are bearish and looking oversold. That doesn’t mean gold’s price won’t drop lower. A silver lining for bulls is the negative divergences visible on RSI and Slow stochastic, which failed to touch lower lows. However, any upward bounce is likely to attract more selling.

On longer-term weekly chart (not shown), the 50 week EMA has crossed below the 200 week EMA. The ‘death cross’ has technically confirmed a long-term bear market.

Silver Chart Pattern


The 6 months daily bar chart pattern of silver shows a futile attempt at bottom formation. After consolidating for a few sessions between 19.5 and 20.5, silver’s price broke downwards on a volume spurt after the Thanksgiving weekend.

Daily technical indicators are looking bearish and oversold. MACD is falling below its signal line. RSI is resting at the edge of its oversold zone after twice failing to move up. Slow stochastic is ensconced inside its oversold zone, and not showing any desire to come out.

A test and breach of the Jun ‘13 low is likely. On longer-term weekly chart (not shown), all three EMAs are falling and silver’s price is trading below them – similar to the daily chart above. That means the bears are in complete control.

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