Tuesday, April 3, 2018

Gold and Silver charts: consolidating sideways between support and resistance zones

Gold chart pattern

Since the second week of Jan '18, the daily bar chart pattern of Gold has been consolidating sideways within a broad 60 points rectangular range (between 1305 and 1365).

Note that the entire consolidation has occurred above the rising 200 day EMA in a bull market, with gold's price receiving support from the zone between 1300 & 1310, and facing resistance from the zone between 1360 & 1370.

Rectangular consolidation patterns are often continuation patterns. Since gold's price entered the consolidation zone after a rally from its Dec '17 low, the probability of an upward breakout above the resistance zone (between 1360 & 1370) is greater.

However, it may be better for longer-term investors to wait for the eventual breakout to initiate any buy/sell action because a 'rectangle' is a fickle pattern that can also act as a 'reversal pattern'.

Daily technical indicators are in bullish zones, and showing slight upward momentum. Another test of resistance from the zone between 1360 & 1370 is likely. Keep a close watch on the US Dollar index to get clues about gold's future price movements. 

On longer term weekly chart (not shown), gold’s price closed above its three rising weekly EMAs in long-term bull territory.  Weekly technical indicators are in bullish zones, but not showing any upward momentum. Some more consolidation is likely.

Silver chart pattern

Since the beginning of Feb '18, the daily bar chart pattern of Silver has been consolidating sideways in a rectangular range (between 16.10 & 16.90) in bear territory. 

Silver's price has been facing resistance from its gradually sliding 200 day EMA, and getting strong support from the zone between 16.10 & 16.20.

Daily technical indicators are looking bearish to neutral, but are showing positive divergences by touching higher tops while silver's price has been touching lower tops.

A rally above the 200 day EMA is a possibility. Bears are likely to use the opportunity to sell again.

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

1 comment:

Subhankar said...

Gold Heading to $1,400 as Sprott Sees `Winnerless' Trade War