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Tuesday, May 5, 2015

Gold and Silver charts: consolidating in bear markets

Gold Chart Pattern

GOLD_May0415

Except for a brief period during Jan ‘15 and early-Feb ‘15, the daily bar chart pattern of gold has spent the better part of 6 months below its falling 200 day EMA in a bear market. All attempts to rally have met with bear selling pressure.

For the past 6 weeks, gold’s price appears to have formed a bullish ‘flag’ pattern. An earlier upward break out from an ‘inverse head and shoulders’ pattern ended in failure due to lack of follow-up buying. Any break out from the ‘flag’ may meet the same fate – unless the break out is accompanied by strong volumes.

Technical indicators are in bearish zones. MACD is below its signal line in negative territory. RSI is below its 50% level, but trying to move up. Slow stochastic has dropped sharply below its 50% level. Any drop below the ‘flag’ can test the Mar ‘15 low of 1140.

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 are in bearish zones.

Silver Chart Pattern

SILVER_May0415

The following comment appeared in the previous post on the daily bar chart pattern of silver: “Silver’s price may again test support from the zone between 15 and 15.50.”

Note that silver’s price bounced up smartly after testing the upper edge of the ‘support zone’, and is trying to remain above its 20 day and 50 day EMAs. However, it closed below its falling 200 day EMA in a bear market.

Technical indicators are looking mildly bullish. MACD is moving above its signal line in negative zone. RSI has crossed above its 50% level, after dropping below it. Slow stochastic faced resistance from the edge of its overbought zone, and is falling towards its 50% level.

On longer term weekly chart (not shown), silver’s price faced resistance from its 20 week EMA, and closed below its three weekly EMAs in a long-term bear market. Technical indicators are in bearish zones, but showing a bit of upward momentum.

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