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Tuesday, July 22, 2014

Gold and Silver charts: an update

Gold Chart Pattern

$GOLD-001-001

The bear market rally on the 6 months daily bar chart pattern of gold from Jun 17 to Jul 11 ‘14 formed a bearish ‘rising wedge’ pattern from which the price broke sharply downwards on very strong volumes on Jul 14 ‘14.

The following remarks were made in the previous post on gold: “The price band between 1330-1350 is a resistance zone, which needs to be crossed convincingly if bulls are to overcome the Mar ‘14 top of 1395, and regain control.”

Gold’s price took support from its 200 day EMA and the lower edge of the wedge, and spiked up on good volumes to touch the upper edge of the wedge – just short of the 1350 level on Jul 10 ‘14.

After dropping below all three EMAs, gold’s price pulled back towards the break down point on the lower edge of the wedge, providing a selling opportunity. MACD and RSI are in bullish zones, but looking weak. Slow stochastic has bounced up from its oversold zone, but is yet to cross above its 50% level.

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 in a long-term bear market. Bears are likely to use any rallies to sell.

Silver Chart Pattern

$SILVER-001-001 

The bear market rally on the 6 months daily bar chart pattern of silver followed in the footsteps of the yellow metal by forming a bearish ‘rising wedge’ pattern from which an expected downward break occurred on Jul 14 ‘14.

Such break downs (or break outs) are often followed by pull backs towards the break down (or break out) point. That is exactly what silver’s price did by crossing the 21.25 level – giving another opportunity to sell for those who may have missed selling on the break down below the wedge.

In the previous post, the following comments were made: “The 200 day EMA has provided good support on the downside so far. If the support holds, then silver’s price may attempt to cross above the resistance zone between 21.25-21.75. Unless that happens, bears will use every opportunity to sell, as they have been doing for the past two trading sessions.”

MACD and RSI corrected down from their respective overbought zones and remain in bullish zones, but their upward momentum has disappeared. Slow stochastic bounced up from the edge of its oversold zone, but is below its 50% level.

On longer term weekly chart (not shown), silver’s price is trading above its 20 week EMA but below its 50 week and 200 week EMAs in a long-term bear market.

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