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Tuesday, October 18, 2016

Gold and Silver charts: break down below 'descending triangle' patterns into bear territories

Gold chart pattern

The daily bar chart pattern of Gold broke down sharply below the 'descending triangle' pattern on Oct 4. After receiving only brief support from its 200 day EMA, gold's price dropped below the support level of 1260 on Oct 6.

The next day, gold's price dropped below the 1250 level intra-day -  meeting the downward target of 60 points below the 1310 level (refer previous post). A sideways consolidation between 1250 and 1260 ensued thereafter. 

Gold's price is trading below its three EMAs in bear territory. All three daily technical indicators are in their respective oversold zones. An upward bounce may occur at any time. 

Now that bears have regained control of the chart, they are likely to sell on every rise in price.

On longer term weekly chart (not shown), gold’s price has dropped and closed below its three weekly EMAs for 2 weeks in a row. The 'golden cross' of the 50 week EMA above the 200 week EMA was prevented. Weekly technical indicators are looking bearish and showing negative divergences by touching lower bottoms. The 10-months long bear market rally may be ending.

Silver chart pattern

The daily bar chart pattern of Silver broke down sharply below the 'descending triangle' pattern with strong volume support on Oct 4. The 200 day EMA provided brief downside support.

Silver's price dropped below its 200 day EMA and the support level of 17.50 on Oct 6, and has been consolidating sideways below its three EMAs in bear territory since then.

All three daily technical indicators are looking oversold. That can trigger a technical bounce. Bears will probably use the bounce to sell.

On longer term weekly chart (not shown), silver’s price has dropped and closed below its three weekly EMAs for 2 weeks in a row. Weekly technical indicators are looking bearish and showing negative divergences by touching lower bottoms. More correction is likely.

1 comment:

Subhankar said...

India's clampdown on 'black money' curbs gold appetite - Kotak

https://in.finance.yahoo.com/news/indias-clampdown-black-money-curbs-gold-appetite-kotak-052304884--finance.html