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Tuesday, August 4, 2015

Gold and Silver charts: bears trying to stop the rot

Gold chart pattern

Gold_Aug0315

The daily bar chart pattern of gold had touched a high-volume ‘panic bottom’ of 1080, which led to the following comment in the previous post: “A ‘panic bottom’ seldom holds. That means the Jul 20 ‘15 low of 1080 is likely to be breached.”

A ‘dead cat bounce’ to 1110 on the next day was followed by an intra-day drop to a 3 years low of 1072 and then a high-volume bounce to 1100 on Jul 24.

Gold seems stuck in a sideways consolidation within a small ‘symmetrical triangle’. Since triangles are usually continuation patterns, a downward break out is likely.

All three EMAs are falling, and gold’s price is trading below them in a bear market. Daily technical indicators have corrected oversold conditions but remain bearish. Any rally will provide a selling opportunity.

On longer term weekly chart (not shown), all three weekly EMAs are falling and gold’s price is trading well below them in a long-term bear market. Weekly technical indicators are in bearish zones. MACD is falling below its signal line. RSI and Slow stochastic are moving sideways.

Silver chart pattern

Silver_Aug0315

The daily bar chart pattern of silver touched an intra-day low of 14.30 on Jul 24 and then bounced up to touch an intra-day high of 15 a week later.

Resistance from the falling 20 day EMA proved too strong for the brief rally. Silver’s price closed below 14.50 deep inside bear territory – a 3 years low on a closing basis.

Daily technical indicators have corrected oversold conditions but remain in bearish zones.

Bears are desperately trying to stop the rot. Still there is no sign of bottom formation.

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 in bearish zones and showing downward momentum.

2 comments:

sathish kumar said...

Sir

China Market is weaker. Will it be reversal trend for Gold & Silver? Or downtrend will continue? Any Important levels to keep in mind?

Thanks & Regards,
Sathish S

Subhankar said...

Gold (and silver) are in long-term bear markets with no sign of a trend reversal any time soon.

When stock markets react, gold's price tends to move up. But gold doesn't give any returns. It is used as a hedge against inflation. With low growth and benign inflation in the global economy, gold (and silver) prices may fall even lower.