Tuesday, June 11, 2019

Gold and Silver charts: correcting after upward breakouts

Gold chart pattern

Note the following comments made in the previous post on the daily bar chart pattern of Gold: "Recent volume spikes on up days indicate buying interest...Gold's price may make another attempt to break out above the 'wedge'."

This time, the breakout above the 'falling wedge' (which is also the 'handle' of a large 'cup and handle' pattern) was successful. Gold's price shot up like a rocket to test its previous (Feb '19) top of 1350, but profit booking dropped it to a close below 1330.

Daily technical indicators are looking overbought. MACD has risen sharply to enter its overbought zone. RSI has fallen from its overbought zone. Slow stochastic is sliding down inside its overbought zone. Gold's price may consolidate or correct towards 1310-1320 zone before it can resume its up move.

After touching a high of 98.26 on May 23 - its highest level in 2 years - the US Dollar index dropped to a low of 96.40 on Jun 7 before recovering to 96.70. The fall may have triggered the upward breakout in Gold's price.

On longer term weekly chart (not shown), gold’s price closed well above its three weekly EMAs in long-term bull territory. Weekly technical indicators are in bullish zones. MACD and Slow stochastic are showing upward momentum. RSI is showing downward momentum - hinting at some price consolidation.

Silver chart pattern

After spending three months below the (purple) down trend line, the daily bar chart pattern of Silver managed to breakout above the down trend line and its 20 day and 50 day EMAs, with strong volume support.

However, resistance from the sliding 200 day EMA proved to be too strong. Bullish hopes took a sever knock as silver's price dropped sharply below its 20 day and 50 day EMAs to close in bear territory.

Daily technical indicators are turning bearish. MACD is facing resistance from its '0' line. RSI has dropped below its 50% level. Slow stochastic has turned down after facing resistance from the edge of its overbought zone.

On longer term weekly chart (not shown), silver's price is trading below its three sliding weekly EMAs in a long-term bear market. Weekly technical indicators are in bearish zones and not showing much upward momentum. Some more correction or consolidation is likely. 

1 comment:

Subhankar said...

Gold poised for upward breakout - John Murphy