Gold and Silver charts: bears regaining control

Gold Chart Pattern

The following comments appeared in the previous post on the daily chart pattern of gold: “Expect some consolidation at current levels. This may be a good time to enter, but with a strict stop-loss at 1200.”

The 1200 level was breached intra-day on a couple of occasions, but gold’s price did not close below it. So technically, the stop-loss did not get triggered – but only just. The 20 day EMA has crossed below the 50 day EMA, and gold’s price is trading below all three EMAs in a bear market.

The rally that crossed above the downward-sloping neckline of the bullish inverse head-and-shoulders pattern (see chart of previous post) and crossed the 1300 level has been all but negated. If you are holding, maintain the strict stop-loss at 1200.

Daily technical indicators are in bearish zones, but showing some signs of upward momentum. MACD is trying to emerge from its oversold zone, but remains below its signal line. RSI has formed a small cup-and-handle like pattern below its 50% level. Slow stochastic has climbed out of its oversold zone.

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 in bearish zones. Bears are regaining control after a sharp rally.

Silver Chart Pattern

The daily bar chart pattern of silver bounced up after receiving good support from the 16 level, but faced resistance from its falling 50 day EMA. All three EMAs have resumed their down moves, and silver’s price is trading below them in a bear market.

The inverse head-and-shoulders pattern drawn on silver’s chart in the previous post has been negated. Pattern failure from time to time makes technical analysis a challenge. The sharp bear market rally that took silver’s price to 18.50 and into bull territory appears over.

Daily technical indicators are looking bearish. MACD is moving up towards its falling signal line in negative zone. RSI is below its 50% level. Slow stochastic has emerged from its oversold zone. More correction is likely.

On longer term weekly chart (not shown), silver’s price is trading below all three weekly EMAs in a long-term bear market. Technical indicators are looking bearish.