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Tuesday, September 6, 2016

Gold and Silver charts: recovering after month-long bear attacks

Gold chart pattern

The following warning note was sounded in the previous post on the daily bar chart pattern of Gold: "A drop towards the 50 day EMA is a possibility before gold's price can move higher."

Gold's price corrected below its 50 day EMA but bounced up after finding good support at the 1310 level, which had provided resistance in May & Jun '16.

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.

Note that the 1310 level was breached on the downside during the past three trading sessions. But those were intra-day breaches which are considered technically insignificant.

Daily technical indicators are in bearish zones, but showing signs of recovery. MACD is below its signal line in negative zone, but has stopped falling. RSI has started moving up towards its 50% level. Slow stochastic has just emerged from its oversold zone.

The up move should resume - may be after a bit of consolidation.

On longer term weekly chart (not shown), gold’s price 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 13th 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 following remark was made in the previous post on the daily bar chart pattern of Silver: "A test of support from the 50 day EMA is a possibility before silver's price can move higher."

Silver's price received just a day's support from its 50 day EMA on Aug 21 before dropping below it. For the next two weeks, silver's price was well supported by the 18.50 level.

Note that 18.50 level had provided resistance to silver's price on Jun 26, but was subsequently breached with strong volumes on Jul 1. That turned it from a resistance to a support level.

Daily technical indicators are beginning to turn bullish. MACD is about to cross above its falling signal line in negative zone. RSI has just crossed above its 50% level. Slow stochastic has emerged from its oversold zone.

Silver's price has closed above its three EMAs in bull territory, and should resume its up move soon. 

On longer term weekly chart (not shown), silver’s price received good support from its 20 week EMA and bounced up to close above its 200 week EMA after a week's close below it. Weekly technical indicators have corrected overbought conditions but remain in bullish zones.

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