Tuesday, September 20, 2016

Gold and Silver charts: bulls strongly defending important support levels

Gold chart pattern

The following remarks were made in the previous post on the daily bar chart pattern of Gold: "The upward breach of the 1310 level on Jun 26 was accompanied by a sharp increase in volumes. A resistance level when breached with high volumes often turns into a support level for future down moves."

Gold's price rose sharply above its 20 day and 50 day EMAs with good volume support on Sep 6, stopping just short of the 1360 level. The next day, it formed a 'reversal day' bar (higher high, lower close) that triggered a correction.

After falling below its 20 day and 50 day EMAs, gold's price found support at the 1310 level once more and has bounced up a bit - albeit with low volume support. Bears are not allowing gold's price to resume its bull rally.

However, the rising 200 day EMA - with gold's price trading 50 points above it - is an indication that bulls have the advantage over the longer term.

Daily technical indicators are in bearish zones. MACD is sliding below its signal line in negative territory. RSI is below its 50% level. Slow stochastic has dropped to the edge of its oversold zone.

Note that the 20 day EMA has formed a bearish 'head and shoulders' like pattern and is about to cross below the 50 day EMA. That can lead to some more correction. In case 1310 is breached, expect support from the zone between 1280-1300.

On longer term weekly chart (not shown), gold’s price again bounced up after receiving support from its rising 20 week EMA, and closed above its three weekly EMAs in long-term bull territory for the 15th week in a row. The 'golden cross' of the 50 week EMA above the 200 week EMA, which will signal a return to a long-term bull market, is still awaited. Weekly technical indicators have corrected overbought conditions but remain in bullish zones.

Silver chart pattern

The daily bar chart pattern of Silver crossed above the 20 level with strong volume support on Sep 6. Bears struck the very next day and pushed silver's price below its 20 day and 50 day EMAs.

After a brief sideways consolidation just above the 18.50 level, silver's price has managed to close above its three EMAs and the 19.25 level in bull territory.

Of the three daily technical indicators, MACD and Slow stochastic are moving sideways in bearish zones. RSI is trying to cross above its 50% level.

Silver's price may make an attempt to cross above its Sep 6 top of 20.25.

On longer term weekly chart (not shown), silver’s price closed below its 200 week EMA, but received good support from its rising 20 week EMA and bounced up. Weekly technical indicators are in bullish zones after correcting overbought conditions.

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