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Tuesday, September 1, 2015

Gold and Silver charts: bear market rallies flatter to deceive

Gold chart pattern

Gold_Aug3115

The daily bar chart pattern of gold rallied past its 20 day and 50 day EMAs to touch an intra-day high of 1170 on Mon. Aug 24 – but failed to test resistance from its falling 200 day EMA and formed a ‘reversal day’ (higher high, lower close) pattern on huge volumes.

The two weeks long sharp bear market rally – triggered by the turmoil in global stock markets – was stopped dead in its tracks. Sellers pounced immediately, and pushed gold’s price below its 20 day and 50 day EMAs into bear territory.

Gold’s price bounced up a little to close exactly on its 50 day EMA, but there is no reason for any bullish hopes. Volumes have trailed off, indicating lack of sufficient buying interest. Expect lower levels soon.

Daily technical indicators are looking neutral to bullish. However, RSI may be forming a bearish ‘head-and-shoulders’ pattern and Slow stochastic has formed a ‘double top’ reversal pattern inside its overbought zone. MACD is in bullish zone but its upward momentum has stalled.

On longer term weekly chart (not shown), gold’s price formed a ‘reversal week’ pattern and closed below all three weekly EMAs in a long-term bear market. Weekly technical indicators are in bearish zones.

Silver chart pattern

Silver_Aug3115

The daily bar chart pattern of silver rose above its 50 day EMA to touch an intra-day high of 15.70 on Fri. Aug 21, but formed a ‘reversal day’ pattern (higher high, lower close) that ended the 3 weeks long bear market rally.

Strong selling dropped silver’s price to a 3 years low of 13.90 on Aug 26. The subsequent bounce on sliding volumes failed to have any impact on bear dominance of silver’s chart.

Silver’s price formed a ‘double top’ reversal pattern, which is more clearly visible on RSI and Slow stochastic indicators. All three indicators are in bearish zones. The low of 13.90 is likely to be tested and breached.

On longer term weekly chart (not shown), silver’s price faced strong resistance from its falling 20 week EMA, and is trading below its three weekly EMAs in a long-term bear market. Technical indicators are in bearish zones.

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