Tuesday, August 21, 2018

Gold and Silver charts: strong US Dollar index wreaks havoc on precious metal bulls

Gold chart pattern

After consolidating sideways for more than two weeks between 'Support/Resistance zone 2 (1237-1248)' and 'Support/Resistance zone 3 (1200-1210)', the daily bar chart pattern of Gold dropped to close below 1200 on Mon. Aug 13.

A brief pullback above 1200 the next day faced more selling pressure from bears. On Thu. Aug 16, gold's price dropped below 1170 - thanks to a rising US Dollar index - losing more than 200 points from its Apr '18 top of 1370. 

A dip in the US Dollar index triggered a pullback towards 1200. Gold's price is trading well below its three daily EMAs in a bear market. Expect the falling 20 day EMA to provide resistance to gold's price - as it has done for more than 4 months.

Daily technical indicators have corrected oversold conditions, but remain in bearish zones. MACD has received support from the edge of its oversold zone. RSI and Slow stochastic have emerged from their respective oversold zones.

On longer term weekly chart (not shown), gold’s price closed well below its three weekly EMAs in long-term bear territoryThe 20 week EMA is falling below the 200 week EMA. The 50 week EMA has formed a bearish 'rounding top' pattern and is about to cross below the 200 week EMA. Weekly technical indicators are looking bearish and oversold. 

Silver chart pattern

For more than two weeks, the daily bar chart pattern of Silver consolidated sideways - facing twin resistances from the falling 20 day EMA and the 'Support/Resistance zone (15.60-15.80)' but getting support from the 'Support/Resistance zone (15.00-15.20)'.

On Mon. Aug 13, silver's price dropped sharply and closed below 15. A brief pullback above 15 the next day met with more selling by bears. Silver's price dropped below 14.40 - testing its Jul '17 low - before recovering on short covering to 14.80.

Daily technical indicators remain in bearish zones after correcting oversold conditions. Silver's price is trading well below its three falling EMAs in a bear market. Expect bears to sell on every rise to maintain their domination.

On longer term weekly chart (not shown), silver’s price closed well below its three falling weekly EMAs in a long-term bear marketWeekly technical indicators are looking oversold, and can trigger a pullback towards 15.00-15.20.

No comments: