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Tuesday, May 21, 2013

Gold and Silver charts: an update

Gold Chart Pattern

Gold_May2013

In a post two weeks back, the 6 months daily bar chart pattern of gold was analysed with the help of certain technical patterns to explain the descent of gold’s price into a bear market. For a longer-term perspective, let us look at the 2 years weekly bar chart pattern of gold.

Note that the zone between 1500 and 1550 had been providing strong support to gold’s price. Last month, the 1500 level was breached decisively, followed by a high-volume drop (‘panic bottom’) below the 200 week EMA. The subsequent pullback moved above the 200 week EMA, but failed to regain the 1500 level.

Gold’s price dropped below the 200 week EMA last week, and looks ready to fall much lower. The 20 week EMA is falling like a stone below the 50 week EMA. Weekly technical indicators are looking bearish and oversold. MACD is falling deeper into negative territory below its signal line. RSI is trying to emerge from its oversold zone. Slow stochastic is sliding down towards its oversold zone.

Bears are using every rise to sell. The time for bottom-fishing hasn’t arrived yet.

Silver Chart Pattern

Silver_May2013

The 2 years weekly bar chart pattern of silver shows a support zone between 26 and 28 that was decisively breached in Apr ‘13. A high-volume ‘panic bottom’ formed at 22, and after a brief upward bounce, the ‘panic bottom’ was breached as silver’s price dropped to the target of 20 (mentioned in the previous post).

Silver’s price has spent 6 straight weeks below the 200 week EMA. The 20 week EMA has crossed below the 200 week EMA, and the 50 week EMA may follow soon. A long-term bear market is looming.

Weekly technical indicators are looking bearish and oversold. MACD is falling below its signal line in negative territory, and has entered its oversold zone. Both RSI and Slow stochastic have remained inside their oversold zones for a few weeks.

Looks like ‘game over’ for the bulls. Any attempt at a rally will probably be an opportunity to sell.

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