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Tuesday, November 15, 2016

Gold and Silver charts: succumb to vicious bear attacks

Gold chart pattern


In the previous post on the daily bar chart pattern of Gold, the possibility of a breakout above 1280 and resistance from the zone between 1290 and 1310 was mentioned.

On Nov 1, gold's price did breakout above 1280 but faced resistance from 1290. The next day, gold's price spurted to 1310 but couldn't move higher. During the next two days, 1310 continued to provide strong resistance.

On Nov 7, bear selling caused gold's price to pull back to the 1280 level, before dropping further towards its 200 day EMA on Nov 8.

Trump's unexpected victory in the US Presidential elections caused strong volatility on Nov 9. Gold's price spiked up to 1340 intra-day with a huge volume surge, only to drop and close near its 200 day EMA.

As the US Dollar strengthened against a basket of global currencies, more selling by bears pushed gold's price below its 200 day EMA into bear territory, and then down to 1210 - followed by a brief recovery.

The possibility of the formation of a bearish 'flag' pattern and a subsequent price drop below 1220 was also mentioned in the previous post.

Though a 'flag' pattern didn't get formed, the chart structure was looking quite bearish despite the formation of a bullish 'ascending triangle' pattern.

Daily technical indicators are looking oversold. Any technical bounce towards 1250 may provide another selling opportunity to bears. 

On longer term weekly chart (not shown), gold’s price formed a large 'reversal week' bar (higher high, lower close) and closed below its three weekly EMAs in a long-term bear market. The 50 week EMA failed to cross above the 200 week EMA. Weekly technical indicators are in bearish zones. 

Silver chart pattern



The daily bar chart pattern of Silver broke out above a small 'ascending triangle' pattern on Nov 1 and entered bull territory above its three EMAs. 

After facing some resistance from the zone between 18.50 and 18.75, silver's price dropped below its 50 day EMA but received good support from its 20 day EMA.

On Nov 8, silver's price re-entered bull territory above its three EMAs and rose to touch the 19 level the next day. 

After failing to overcome resistance from the 19 level on Nov 9 & 10, silver's price crashed below its three EMAs into bear territory on Nov 11 and dropped further on Nov 14.

All three daily technical indicators are in bearish zones and showing downward momentum - hinting at some more correction. 

Note that both RSI ('double top') and Slow stochastic ('head and shoulder') formed reversal patterns in bullish zones that triggered the sharp corrections. 

On longer term weekly chart (not shown), silver’s price has closed well below its three weekly EMAs in a long-term bear market. Weekly technical indicators are looking bearish and showing downward momentum.

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