Tuesday, November 28, 2017

Gold and Silver charts: tussle between bulls and bears remain unresolved

Gold chart pattern

The daily bar chart pattern of Gold shows a sideways consolidation for the past two months - facing resistance from the 'Support/resistance zone' (between 1300 & 1310) and receiving support from the 200 day EMA . However, bulls are trying to gain ground gradually. 

Gold's chart appears to be forming a bullish 'rounding bottom' pattern, which is more clearly visible on the 20 day EMA. Another attempt may be made by bulls to push gold's price above the 'support/resistance zone'. The previous attempt on Oct 16 had failed.

Daily technical indicators have turned bullish. MACD and RSI have just entered bullish zones. Slow stochastic has risen towards its overbought zone, and can limit further upside in gold's price. All three have formed bullish patterns of 'higher tops, higher bottoms' during the past month.

Strong volume bars on recent down days mean bears are not going to yield much further ground without a proper fight.

On longer term weekly chart (not shown), gold’s price closed above its three weekly EMAs in long-term bull territory.  Weekly MACD and RSI are moving sideways in bullish zones. Slow stochastic has climbed out of its oversold zone, but is showing negative divergence by touching a lower bottom.

Silver chart pattern

For the past 7 weeks, the daily bar chart pattern of Silver has been consolidating sideways within a 'symmetrical triangle' pattern. All three EMAs are moving sideways within the 'triangle'; silver's price is oscillating about the three EMAs.

Daily MACD and RSI are in their neutral zones. Slow stochastic has dropped below its 50% level, but is trying to recover. What will be silver's next move?

That's a good question. A 'triangle' is an unreliable pattern because a breakout can occur either above or below the 'triangle'. There is a third possibility also. Silver's price can continue to meander sideways and move through the apex of the 'triangle'.

[If the latter situation does arise, a horizontal line through the apex of the 'triangle' (at 17) can become a trend deciding level. Above 17 will be bullish; below 17 will be bearish.]

So, one needs to wait for the eventual breakout (or not) to decide whether to buy, sell or hold. Strong volumes on recent down days mean bears may have a slight edge.

On longer term weekly chart (not shown), silver’s price closed just below its 20 week & 50 week EMAs, and well 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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