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Tuesday, May 6, 2014

Gold and Silver charts: bulls attempt another rally

Gold Chart Pattern

Gold_May0514

The following comments were made in the previous post on the daily bar chart pattern of gold: “The zone between 1260-1280 acted as a support/resistance zone during the past 6 months. Some buying interest may emerge there. But bears are likely to use any rally to sell.”

Note the spike in buying volume when gold’s price dropped into the zone between 1260-1280. Fundamental analysts may say that buying interest was a result of political unrest in Ukraine and growth slowdown in China. Whatever. In the near term, the support zone is likely to hold.

Gold’s price has closed above its 20 day and 50 day EMAs after two weeks, and may try to move up to test the resistance of its falling 200 day EMA. No prizes for guessing what bears are likely to do.

Daily technical indicators are beginning to look mildly bullish. MACD is negative, but has crossed above its signal line. RSI has crossed above its 50% level into bullish zone. Slow stochastic is trying to follow suite.

On longer term weekly chart (not shown), gold’s price is trading above its 20 week EMA but below its 50 week and 200 week EMAs. Weekly technical indicators are in neutral zones.

Silver Chart Pattern

Silver_May0514

In the previous update to the daily bar chart pattern of silver, investors were forewarned as follows: “Silver’s price is trying to form a bottom at 19.25, but is likely to slip further down to breach its previous low of 18.75.”

Silver’s price slipped below the 18.75 level intra-day on May 1, but bounced up sharply and continued to move up to close at the level of its 20 day EMA. That has not changed the bearishness on the chart.

MACD is still moving sideways in negative territory, crisscrossing its signal line. RSI has moved up to its highest level in more than a month, but remains below its 50% level. Slow stochastic has managed to creep above its 50% level.

On longer term weekly chart (not shown), silver’s price continues to trade below all three weekly EMAs in a bear market.

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