Tuesday, February 6, 2018

Gold and Silver charts: bear attacks halt bull rallies

Gold chart pattern

The daily bar chart pattern of Gold rose above 1365 to touch a new 52 week high on Jan 25, but overbought technical indicators and a mild recovery in the US Dollar Index led to profit booking.

So far, the 20 day EMA has provided good downside support. Gold's Price is trading well above its rising 200 day EMA in a bull market. Bulls are likely to use the correction to buy.

Daily technical indicators have corrected overbought conditions and are showing downward momentum. Some more correction is possible. Note that RSI and Slow stochastic showed negative divergences by failing to touch new highs with gold's price.

On longer term weekly chart (not shown), gold’s price closed above its three weekly EMAs in long-term bull territory, but formed a 'shooting star' candlestick pattern.  Weekly MACD and RSI are in bullish zones, but not showing much upward momentum. Slow stochastic is falling inside its overbought zone. 

Silver chart pattern

The daily bar chart pattern of Silver touched an intra-day high of 17.70 on Jan 25 - its highest level in 4 months. But the sojourn into bull territory didn't last very long.

Daily technical indicators showed negative divergences by touching lower tops, which triggered a sharp correction below the three EMAs back into bear territory.

In a blow to silver bulls, the 'golden cross' of the 50 day EMA above the 200 day EMA - which would have technically confirmed a return to a bull market - was prevented.

Strong volumes on recent down-days suggest that bears are active. Some more correction is likely. 

On longer term weekly chart (not shown), silver’s price closed below its three weekly EMAs in a long-term bear marketWeekly MACD and RSI are in neutral zones. Slow stochastic is falling towards its 50% level.

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