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Tuesday, August 1, 2017

Gold and Silver charts: pullback rallies show strength but bears getting ready to attack

Gold chart pattern


The following comments were made in the previous post on the daily bar chart pattern of Gold: "The pullback rally may continue a bit further, but expect resistance from the converging 50 day and 200 day EMAs." 

A sliding US Dollar index added considerable strength to the pullback rally. The 50 day and 200 day EMAs provided only brief resistance on Jul 18 & 19 before gold's price climbed into bull territory.

After a short pullback to the 200 day EMA on Jul 26, the rally resumed and rose past 1270 before correcting a bit. The 'death cross' of the 50 day EMA below the 200 day EMA was averted.

Gold's price is trading above its three EMAs in a bull market. Daily technical indicators are in bullish zones and showing upward momentum. Can the rally proceed further?

Note that RSI's up move has stalled near the edge of its overbought zone - just like it did on Jun 6 when gold touched its previous top of 1299. Slow stochastic is inside its overbought zone, and may be forming a small 'double top' reversal pattern.

The pullback rally is probably on its last legs. Profit booking can begin at any time.

On longer term weekly chart (not shown), gold’s price closed above its three weekly EMAs in long-term bull territory. Weekly technical indicators are in bullish zones, and showing upward momentum.

Silver chart pattern


The daily bar chart pattern of Silver tried to follow in the footsteps of the yellow metal by rallying past its 20 day and 50 day EMAs.

However, there is a strong resistance zone between 16.75 and 17 that can thwart the rally. Silver's price is trading below its sliding 200 day EMA in a bear market.

Daily MACD and RSI are in bullish zones, and showing upward momentum. Slow stochastic is looking overbought, and showing negative divergence by failing to rise higher with silver's price.

Any further rally is likely to invite profit booking.

On longer term weekly chart (not shown), silver’s price faced resistance from its 20 week EMA, and closed below its three weekly EMAs in a long-term bear marketWeekly MACD and RSI are still in bearish zones. Slow stochastic has entered bullish zone and showing upward momentum.

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