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Tuesday, February 17, 2015

Gold and Silver charts: an update

Gold Chart Pattern

GOLD_Feb1315

The daily chart pattern of gold had bounced up after receiving support from its 200 day EMA in Jan ‘15, but could not sustain in bull territory for long. A drop below all three EMAs on a high volume surge was followed by a test of the downward-sloping neckline of the inverse head-and-shoulders pattern.

The 20 day EMA has crossed below the 200 day EMA, and gold’s price is trading below all three EMAs in a bear market. An upward bounce from the neckline has once again raised bullish hopes. However, gold’s price needs to cross above its Jan ‘15 top of 1310 for the bullish pattern of ‘higher tops and higher bottoms’ to continue.

Daily technical indicators are in bearish zones, but showing signs of turning around. MACD is below its falling signal line, and has dropped into negative zone. RSI has fallen below its 50% level, but trying to move up. Slow stochastic has plummeted to its oversold zone, but has stopped falling.

Expect some consolidation at current levels. This may be a good time to enter, but with a strict stop-loss at 1200.

On longer term weekly chart (not shown), gold’s price closed below its three weekly EMAs in a long-term bear market. Technical indicators are turning bearish.

Silver Chart Pattern

SILVER_Feb1315

The following comments appeared in the previous post on the daily bar chart pattern of silver: “Silver’s price may consolidate near the neckline of the inverse head-and-shoulders pattern before making another attempt to enter bull territory.”

Note that silver’s price has been consolidating sideways in a range between 16.50 and 17.50 – gyrating about the downward-sloping neckline of the inverse head-and-shoulders pattern. It is trading below its falling 200 day EMA in a bear market.

Daily technical indicators are beginning to turn bullish. MACD is below its falling signal line, but has bounced up from its ‘0’ line. RSI has moved above its 50% level after falling below it. Slow stochastic has emerged from its oversold zone.

On longer term weekly chart (not shown), silver’s price closed above its 20 week EMA but is trading below its falling 50 week and 200 week EMAs in a long-term bear market. Technical indicators are looking bearish. A convincing move above 19 will return silver’s price to a bull market.

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