Tuesday, June 25, 2019

Gold and Silver charts: rallying after upward breakouts

Gold chart pattern

The following remark was made in the previous post on the daily bar chart pattern of Gold: "Gold's price may consolidate or correct towards 1310-1320 zone before it can resume its up move."

On Jun 11, gold's price touched a low of 1319, but formed a 'reversal day' bar (lower low, higher close) that led to a strong rally. After a brief hesitation around 1345 - which happens to be the level of the 'rim' of the 'cup and handle' pattern - gold's price shot up like a rocket past 1400.

Daily technical indicators are looking quite overbought. MACD has risen sharply inside its overbought zone. RSI is rising inside its overbought zone. Slow stochastic is also rising inside its overbought zone, but showing negative divergence by touching a lower top.

Gold's price is trading well above its three rising EMAs in a bull market. However, the rally has been a bit too steep. Some profit booking is likely to emerge soon. 

The US Dollar index dropped vertically below 95.50 on Jun 24, triggering the sharp rally in Gold's price. The price break out above the 'rim' (1345) has technically confirmed the 'cup and handle' pattern - with an upward target above 1500.

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 looking bullish and overbought. Some price correction/consolidation may follow.

Silver chart pattern

The daily bar chart pattern of Silver had been struggling to overcome resistance from its 200 day EMA after breaking out above the (purple) down trend line. Finally, on Thu. Jun 20, silver's price did break out above its 200 day EMA into bull territory.

As often happens after a breakout, a pullback down to the 200 day EMA followed on Fri. Jun 21. Silver's price then bounced up to close near 15.40 - giving some relief to bulls.

Daily technical indicators are in bullish zones. MACD is rising above its signal line. RSI has slipped down after facing resistance from the edge of its overbought zone. Slow stochastic is consolidating at the edge of its overbought zone. Some price consolidation/correction can be expected.

On longer term weekly chart (not shown), silver's price closed above its 20 week and 50 week EMAs, but well below its sliding 200 week EMA in a long-term bear market. Weekly technical indicators are turning bullish. 

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