Tuesday, November 14, 2017

Gold and Silver charts: battle between bulls and bears reach a stalemate

Gold chart pattern

The following comments appeared in the previous post on the daily bar chart pattern of Gold: "Another test of support from the 200 day EMA seems on the cards. A possible breach of the 200 day EMA can drop gold's price to the zone between 1240 & 1250."

There were several tests of support, and even a few intra-day breaches of the 200 day EMA between Oct 26 and Nov 6. However, bulls put up a good fight as gold's price failed to close below the 200 day EMA even for a single day.

Technically, the 200 day EMA did not get breached, giving bulls the upper hand. On Nov 9, gold's price rose above its 20 day and 50 day EMAs to touch a lower top of 1289.50. Bears used the 'sell on rise' strategy, and are not showing any signs of giving up. 

Daily technical indicators are sending mixed signals - which is often the case during periods of consolidation. MACD is above its signal line - moving sideways in bearish zone. RSI is also in bearish zone - just below its 50% level. Slow stochastic is in bullish zone, but showing downward momentum.

On longer term weekly chart (not shown), gold’s price closed below its 20 week EMA but above its 50 week and 200 week EMAs in long-term bull territory.  Weekly MACD and Slow stochastic are looking bearish and showing downward momentum. RSI is in neutral zone.

Silver chart pattern

The following comments appeared in the previous post on the daily bar chart pattern of Silver: "It (silver's price) has been oscillating about its three EMAs, which have converged together. A sharp move is likely to follow. Odds are better for a downward move."

On Oct 27, the expected downward move touched a higher intra-day low of 16.62 and bounced up above its three EMAs. Bears used the 'sell on rise' strategy, pushing down silver's price below its 200 day EMA and gaining a slight advantage.

For the past 5 weeks, silver's price has been consolidating sideways within a 'symmetrical triangle' pattern, from which a breakout can occur upwards or downwards.

Since silver's price entered the 'triangle' after a corrective move, the likelihood of a downward breakout is greater. However, it may be prudent to wait for the breakout before deciding to buy or sell.

Daily technical indicators are giving conflicting signals. MACD has merged with its signal line and is moving sideways in bearish zone. RSI is at its neutral zone. Slow stochastic is falling towards its 50% level.

On longer term weekly chart (not shown), silver’s price closed between its 20 week and 50 week EMAs, and below its sliding 200 week EMA in a long-term bear marketWeekly MACD and RSI are in neutral zones. Slow stochastic is in bearish zone.

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