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Tuesday, February 2, 2016

Gold and Silver charts: bear market rallies from Dec '15 lows coming to an end?

Gold chart pattern

A two months long bear market rally on the daily bar chart pattern of gold, triggered by sell-off in global stock markets and plummeting oil prices, may be coming to an end.

Gold's price have gained more than 5% during Jan '16 after forming a bullish 'rounding bottom' pattern - more clearly visible on the 50 day EMA. But some technical signals are flashing a bearish warning light.

The sliding 200 day EMA is providing resistance to the rally. Volumes are tapering off. Technical indicators are looking overbought. Slow stochastic has formed a 'double top' reversal pattern inside overbought zone, and showing negative divergence by touching a lower top.

Global stock markets are still bearish, which can help sustain the rally in gold's price for a day or two more - may be to 1140 or so. If you managed to enter at lower levels, profit booking may be contemplated.  

On longer term weekly chart (not shown), gold’s price crossed above its 20 week EMA, but is trading below its 50 week and 200 week EMAs in a long-term bear market. Weekly technical indicators are turning bullish.

Silver chart pattern

The daily bar chart pattern of silver rallied past its 50 day EMA after nearly three months, but failed to cross above the Dec '15 top of 14.60 and slipped down.

Silver's price gained almost 4% during Jan '16, but is trading well below its falling 200 day EMA in bear territory. 

Daily technical indicators are in bullish zones. However, MACD and RSI are not showing much upward momentum. Slow stochastic has dropped from its overbought zone. 

On longer term weekly chart (not shown), silver’s price failed to overcome resistance from its falling 20 week EMA, and is trading below its three weekly EMAs in a long-term bear market. Weekly technical indicators are in bearish zones, but showing slight upward momentum.

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