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Tuesday, December 17, 2013

Gold and Silver charts: an update

Gold Chart Pattern


The following comments were made in the previous post on the 6 months daily bar chart pattern of gold: “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.”

Gold’s price did bounce past its 20 day EMA and touched 1270. But bears used the opportunity to sell, and pushed the price below its 20 day EMA on strong volumes. Is it game over for bulls?

Daily technical indicators are looking bearish, though they have corrected from oversold conditions. Note that the MACD signal line (in red) is forming a ‘rounding bottom’ pattern. Also, RSI and Slow stochastic have formed ‘cup-and-handle’ like patterns. These are bullish patterns that could lead to a rally.

On longer term weekly chart (not shown), the 50 week EMA has crossed below the 200 week EMA – the ‘death cross’ confirming a long-term bear market. Expect bears to sell on every rise.

Silver Chart Pattern


The 6 months daily bar chart pattern of silver is in the midst of a bear market rally that is struggling to stay above its 20 day EMA. The good news for bulls is that silver’s price touched a higher bottom. The bad news is that bears are using the rally to sell.

Daily technical indicators are forming bullish patterns after correcting overbought conditions. MACD is above its signal line in negative territory, with the signal line forming a ‘rounding bottom’ pattern. RSI is below its 50% level and Slow stochastic is about to drop below its 50% level; but both have formed cup-and-handle like patterns.

A continuation of the rally can be expected for a few more days – but bears are likely to sell on every rise. On longer-term weekly chart (not shown), silver’s price is trading below all three weekly EMAs. Volumes on down-weeks remain strong. Bears are in no mood to relinquish control.

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