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Tuesday, December 6, 2016

Gold and Silver charts: bears continue to rule

Gold chart pattern


Trump's election win and the subsequent strengthening of the US Dollar, and oversold technical indicators had led to the following comment in the previous post on the daily bar chart pattern of Gold: "Any technical bounce towards 1250 may provide another selling opportunity to bears."

The bounce was feeble, falling short of the 1240 level. Bears continued to sell, forcing gold's price down to the 1160 level. The 'death cross' of the 50 day EMA below the 200 day EMA (marked by grey ellipse) has technically confirmed a return to a bear market.

Daily technical indicators are trying to correct oversold conditions, but are yet to emerge from their oversold zones. The price correction since Nov 9 has been overdone. A technical bounce and some sideways consolidation is possible.

On longer term weekly chart (not shown), gold’s price has closed well below its three falling weekly EMAs in a long-term bear market. Weekly MACD and Slow stochastic are inside oversold zones. RSI is falling towards its oversold zone. 

Silver chart pattern


The daily bar chart pattern of Silver shows that bears are continuing to dominate - but silver bulls have suffered less than gold bulls.

Silver's price has bounced up after dropping close to the long-term 'support-resistance' level of 16, but is facing resistance from the falling 20 day EMA.

The 'death cross' of the 50 day EMA below the 200 day EMA hasn't occurred yet - though it may just be a matter of time.

All three daily technical indicators have corrected oversold conditions and are showing upward momentum. MACD and RSI are showing positive divergences by touching higher bottoms while silver's price dropped lower.

Expect some sideways consolidation between 16 and 17.50.

On longer term weekly chart (not shown), silver’s price closed well below its three weekly EMAs in a long-term bear market. Weekly MACD and RSI are in bearish zones. Slow stochastic is inside its oversold zone.

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