Tuesday, March 6, 2018

Gold and Silver charts: face strong bear attacks

Gold chart pattern

Note the following comments from the previous post on the daily bar chart pattern of Gold: "The first technical confirmation of a 'double top' - lower volumes during formation of the second top - has been received. The second technical confirmation - a fall below the 'valley' low of 1309 touched on Feb 8 - is awaited."

The second technical confirmation was received when gold's price touched an intra-day low of 1303.60 on Mar 1, and closed at 1305.20. The downward target of the 'double top' pattern is 1255. Will gold's price fall there?

The possibility can't be ruled out. The US Dollar index has bounced up after forming a 'double bottom' at 88.50 (on a closing basis). If the Dollar index continues to recover, gold's price should move down.

Note that the 'support/resistance zone' between 1300 & 1310 provided good support, helping gold's price to bounce up. The rising 200 day EMA will be defended strongly by bulls in case gold's price falls below 1300.

Daily technical indicators are in bearish zones, and not showing much upward momentum. Any attempt at a rally will induce bear selling.

On longer term weekly chart (not shown), gold’s price closed above its three weekly EMAs in long-term bull territory, but has formed a 'double top' reversal pattern.  Weekly technical indicators are in bullish zones, but showing downward momentum. Some more correction is possible. 

Silver chart pattern

The following comment was made in the previous post on the daily bar chart pattern of Silver: "Expect bears to 'sell on rise'." 

So they did. Silver's price faced strong resistance from its falling 50 day EMA and closed below its three EMAs in bear territory.

However, by touching a low of 16.10 on Mar 1, silver's price has formed a 'double bottom' reversal pattern which can lead to a technical bounce.

Daily technical indicators are in bearish zones, but showing neither upward nor downward momentum. Some sideways consolidation is likely before bears take complete control.

On longer term weekly chart (not shown), silver’s price closed below its three weekly EMAs in a long-term bear marketWeekly technical indicators are sliding down in bearish zones. 

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