Tuesday, February 18, 2014

Gold and Silver charts: an update

Gold Chart Pattern


The daily bar chart pattern of gold has been rallying strongly for the past 8 trading sessions – gaining almost 140 points from its Dec ‘13 low. The 20 day EMA has crossed above the 50 day EMA. The 50 day EMA has formed a saucer-like ‘rounding bottom’ pattern which has bullish implications.

Has the long bear phase since the Sep ‘11 top come to an end? Technically, the answer is: Not yet. The 200 day EMA is still falling and gold’s price is yet to cross above it. Daily technical indicators are looking overbought, which means a price correction may be around the corner.

If gold’s price touches a higher bottom (than its previous bottom of 1240) after the likely correction and resumes its up move past its 200 day EMA, the bear phase may come to an end. If 1240 is breached on the way down, bears are likely to regain control.

On longer-term weekly chart (not shown), gold’s price has risen above its 20 week EMA but is trading below its falling 50 week and 200 week EMAs. Bulls still have a lot of work to do.

Silver Chart Pattern


The daily bar chart pattern of silver shows a sharp jump towards its falling 200 day EMA, backed by strong volumes. The 20 day EMA is about to cross above its 50 day EMA, which is bullish in the near term.

However, daily technical indicators are looking overbought. MACD has risen above its signal line into positive territory. RSI and Slow stochastic have entered their respective overbought zones. Some price correction is likely before silver can continue with its up move.

On longer term weekly chart (not shown), silver’s price is above its 20 week EMA but below its falling 50 week and 200 week EMAs. It is too early to call an end to the bear market.

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