Amazon deals

Tuesday, January 7, 2014

Gold and Silver charts: double-bottoms formed? Not so.

Gold Chart Pattern

Gold_Jan0614

The one year daily bar chart pattern of gold touched a low of 1200 at the end of 2013, and embarked on a rally past its 20 day EMA. However, the rally seems to have stalled after touching its falling 50 day EMA.

Note that gold’s price had touched a low of 1200 in end Jun ‘13, followed by a strong rally of more than 200 points. So, has gold formed a bullish double-bottom reversal pattern? Volume action suggests otherwise.

The rally from the Dec ‘13 bottom should have been supported by higher volumes. Instead, volumes were higher during formation of the Jun ‘13 low. Down day volumes have remained strong during the past 6 months.

Daily technical indicators are looking bullish. MACD is negative, but has crossed above its signal line. RSI has moved above its 50% level. Slow stochastic is rising quickly towards its overbought zone.

The rally may go on for a bit longer, but bears are likely to press sales once again.

Silver Chart Pattern

Silver_Jan0614

The one year daily bar chart pattern of silver touched a low of 18.50 at the end of 2013 – touching a slightly higher bottom than the one touched back in Jun ‘13.

The subsequent rally is facing strong resistance from the 50 day EMA. Lower volumes during the second bottom rules out the possibility of formation of a ‘double bottom’ reversal pattern.

Daily technical indicators are looking bullish. MACD is rising above its signal line towards positive territory. RSI has moved above its 50% level. Slow stochastic has reached the edge of its overbought zone.

Further attempts to move up are likely to attract renewed bear selling.

On longer term weekly charts (not shown), gold and silver are trading below their three weekly EMAs and are in long term bear markets.

No comments: