Tuesday, July 23, 2019

Gold and Silver charts: break out upwards from consolidation zones

Gold chart pattern

The daily bar chart pattern of Gold shows three clearly identifiable consolidation patterns - a 'falling wedge', a 'rectangle' and a 'symmetrical triangle'. All three patterns formed after the 'golden cross' of the 50 day EMA above the 200 day EMA technically confirmed a bull market.

After breaking out above the 'symmetrical triangle' on Wed. Jul 17, gold's price touched a 52 week high of 1454 on Thu. Jul 18. Note that all three technical indicators showed negative divergences by touching lower tops, which triggered a pullback to the top of the 'triangle'.

Daily technical indicators are in bullish zones after correcting overbought conditions, but are not showing much upward momentum. MACD is moving sideways below its falling signal line. RSI is hovering just below its overbought zone. Slow stochastic has bounced up after slipping below its 50% level.

The US Dollar index has been consolidating sideways between 96.40 and 97.20 since Jul 5. Gold's price consolidated sideways in tandem. After touching a low of 96.40 on Jul 19, the Dollar index has been climbing towards 97.20.

On longer term weekly chart (not shown), gold’s price closed well above its three rising weekly EMAs in long-term bull territory. Weekly technical indicators are inside their respective overbought zones. Some price correction or consolidation may follow.

Silver chart pattern

The daily bar chart pattern of Silver consolidated within a bullish 'flag' pattern from which an upward breakout occurred on Mon. Jul 15. Rising volumes propelled silver's price to a 52 week high of 16.62 on Fri. Jul 19 before profit booking caused a fall just below 16.20.

Silver's price has since bounced up to close just above 16.40, and well above its three EMAs in bull territory. The 'golden cross' of the 50 day EMA above the 200 day EMA has technically confirmed a return to a bull market. 

Daily technical indicators are looking bullish and overbought. MACD and RSI are rising inside their respective overbought zones. Slow stochastic is correcting inside its overbought zone - hinting at some near-term price consolidation or correction.

On longer term weekly chart (not shown), silver's price tested resistance from its 200 week EMA, and closed well above its 20 week and 50 week EMAs in a long-term bear market. Weekly technical indicators are looking bullish and showing upward momentum. 

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