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Tuesday, September 30, 2014

Gold and Silver charts: an update

Gold Chart Pattern

Gold_Sep3014

In a post two weeks ago, the bar chart pattern of gold had dropped below the support level of 1240. Though technical indicators were in their respective oversold zones, bears were expected to sell on rallies. Gold’s price was in danger of testing and breaching its longer-term support level of 1180.

A pullback towards 1240 met with more bear selling. Gold’s price has been in a sideways consolidation with a downward bias, and dropped briefly below the 1210 level. Oversold conditions have been corrected somewhat.

Daily technical indicators are bearish. MACD has formed a small ‘rounding bottom’ pattern to touch its falling signal line, but remains inside its oversold zone. RSI has emerged from its oversold zone, but may fall back in again. Slow stochastic has also emerged from its oversold zone, but its upward momentum looks weak.

On longer term weekly chart (not shown), gold’s price is trading well below its three weekly EMAs in a long-term bear market. Technical indicators are in bearish zones – a test and possible breach of 1180 is likely.

Silver Chart Pattern

Silver_Sep3014

Two weeks back, the 6 months daily bar chart pattern of silver was trading within a downward channel, and had breached the support level of 18.65. The Jun ‘13 low of 18 was under threat of being tested and breached.

A brief intra-day move above the 18.75 level met with bear selling, and three days later, silver’s price dropped below 18 on a huge volume surge that breached the lower edge of the downward channel. An intra-day low of 17.25 was touched, followed by a brief recovery.

Daily technical indicators are well inside their respective oversold zones. A pullback can occur at any time. But bears have a stranglehold on the chart. There seems to be little hope of any bullish revival.

On longer term weekly chart (not shown), silver’s price is trading well below its three weekly EMAs in a long-term bear market. Technical indicators are bearish, and looking a bit oversold. Next downside target is 16.

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