Gold and Silver charts: bear market rallies continue

Gold Chart Pattern

In the previous post on the daily bar chart pattern of gold, daily technical indicators were turning bullish. The rally from the Nov 7 ‘14 low of 1130 was expected to continue – and so it has. After facing resistance from its falling 50 day EMA, gold’s price started sliding and dropped sharply below its 20 day EMA, backed by strong volumes, on Nov 28 ‘14.

A big ‘reversal day’ pattern (lower low, higher close) on huge volume support propelled gold’s price above its 20 day and 50 day EMAs to an intra-day high of 1220 on Dec 1. Note that gold is trading well below its falling 200 day EMA in a bear market. The bearish pattern of ‘lower tops and lower bottoms’ is intact. Can the rally continue a little longer?

Daily technical indicators are still looking bullish. MACD is negative, but is rising above its signal line. RSI has moved above its 50% level after a sharp drop below it. Slow stochastic has dropped from its overbought zone, but its downward momentum has stalled. As mentioned in the previous post, the support/resistance zone between 1240-1260 may come into play if the rally continues.

On longer term weekly chart (not shown), gold’s price is trading below its three weekly EMAs in a long-term bear market. Technical indicators have corrected oversold conditions, but remain in bearish zones. The next long-term support is at 1000; that is where gold’s price may find a bottom.

Silver Chart Pattern

The daily bar chart pattern of silver dropped to a new intra-day low of 14.20 on Dec 1 ‘14, but formed a ‘reversal day’ pattern (lower low, higher close) backed by strong volumes. The support at 14 was tested but not breached.

However, silver’s price failed to get past the strong resistance from its falling 50 day EMA, and is trading well below its falling 200 day EMA in a long-term bear market. Expect the bears to get active at any time.

Technical indicators are looking bullish. MACD is rising above its signal line in negative zone. RSI managed to climb above its 50% level after a sharp fall below it. Slow stochastic has dropped from its overbought zone, but is above its 50% level.

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 have corrected oversold conditions, but remain in bearish zones.