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Tuesday, October 20, 2015

Gold and Silver charts: an update

Gold chart pattern

GOLD_Oct1915

The daily bar chart pattern of gold broke out upwards from a ‘triangle’ pattern within which it consolidated for 7 weeks. There was no significant increase in volumes that would have technically validated the breakout.

After briefly facing resistance from its 200 day EMA, gold’s price crossed above its long-term moving average into bull territory with a volume surge on Oct ‘14.

However, it formed a ‘reversal day’ pattern (higher high, lower close) on the next day, and has pulled back to seek support from its 200 day EMA.

Daily technical indicators are correcting overbought conditions, but remain in bullish zones. RSI and Slow stochastic are showing negative divergences by failing to touch new highs with gold’s price.

Bears can be expected to push down gold’s price below its 200 day EMA.

On longer term weekly chart (not shown), gold’s price faced resistance from its 50 week EMA, and closed well below its 200 week EMA in a long-term bear market. MACD is moving up in negative zone. RSI crossed above its 50% level but has turned down. Slow stochastic has entered its overbought zone.

Silver chart pattern

SILVER_Oct1915

After breaking out upwards from a ‘triangle’ pattern within which it had consolidated for 6 weeks, the daily bar chart pattern of silver continued its bear market rally to cross above its 200 day EMA.

However, silver’s price has been struggling to convincingly cross above its long-term moving average, and has formed a bearish ‘rising wedge’ pattern. Bears are likely to use the opportunity to sell.

Daily technical indicators are correcting overbought conditions. MACD and Slow stochastic are moving down inside their overbought zones. RSI is falling towards its 50% level.

On longer term weekly chart (not shown), silver’s price moved above its 20 week EMA, but faced strong resistance from its 50 week EMA. It is trading well below its falling 200 week EMA in a long-term bear market. MACD is moving up in negative zone. RSI crossed above its 50% level but has turned down. Slow stochastic has entered its overbought zone.

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