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Tuesday, March 18, 2014

Gold and Silver charts: an update

Gold Chart Pattern

Gold_Mar1814

The daily bar chart pattern of gold consolidated sideways between 1330 and 1350 for 7 trading sessions during which it managed to close above its 200 day EMA every day. On Wed. Mar 12, gold’s price broke out above 1350 on strong volumes, rose to nearly touch the 1400 level on Mon. Mar 17, but formed a ‘reversal day’ pattern (higher high, lower close) and corrected down.

The 20 day EMA has crossed above the 200 day EMA, but the ‘golden cross’ of the 50 day EMA above the 200 day EMA is still awaited. Gold’s price has gained 210 points (18%) year-to-date from its Dec 31 ‘13 low, which is less than the minimum 20% gain required for a bull market to begin.

Technical indicators are showing negative divergences by failing to touch new highs with gold’s price, and are correcting from overbought conditions. A correction will help bulls to charge higher in a bid to reverse the bear market. As mentioned in the previous post, expect resistance from the zone between 1425 and 1525.

On longer term weekly chart (not shown), gold’s price has moved above its 20 week and 50 week EMAs, but is facing resistance from its 200 week EMA. Technically, the long-term bear market is intact.

Silver Chart Pattern

Silver_Mar1814

The daily bar chart pattern of silver is facing difficulty in shaking off the bear stranglehold. Silver’s price dropped to its rising 50 day EMA, received good support, and bounced up strongly towards its falling 200 day EMA.

Bears stepped up their selling, and silver’s price tumbled towards its 20 day EMA. Daily technical indicators are turning bearish. MACD is still positive, but sliding below its falling signal line. RSI bounced up from its 50% level, but is falling towards it again. Slow stochastic moved up sharply from its oversold zone, but stopped short of its 50% level.

On longer term weekly chart (not shown) silver’s price is above its 20 week EMA but trading below its falling 50 week and 200 week EMAs. There is no sign of reversal of the long-term bear market.

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