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Tuesday, June 2, 2015

Gold and Silver charts: bear market rallies end?

Gold Chart Pattern



In the previous post on the daily bar chart pattern of gold, the breakout above the 200 day EMA was not expected to lead to a sustained rally due to the falling volumes that accompanied the breakout. Sure enough, bears used the opportunity to strike.

Gold's price dropped to seek support from its 20 day and 50 day EMAs for a few days before falling below all three EMAs into bear territory. The 2 months long rally from the Mar '15 low of 1140 appears to have come to an end.

Why 'appears'? Note that gold's price has not fallen below its May '15 low of 1170. The bullish pattern of 'higher tops and higher bottoms' from the Mar '15 low still remains in force. But for how much longer? Strong volumes on down days show that bears are regaining control.

Daily technical indicators are looking bearish. MACD is below its signal line and has entered negative zone. RSI is moving sideways below its 50% level. Slow stochastic is at the edge of its oversold zone.

On longer term weekly chart (not shown), gold’s price is trading below its three weekly EMAs in a long-term bear market. MACD and RSI are moving sideways in bearish zones. Slow stochastic is falling towards its 50% level.

Silver Chart Pattern



The following comment was made in the previous post on the daily bar chart pattern of silver: "A correction can occur at any time." The reason for the comment? All three technical indicators were in their overbought zones. Also, the breakout above the 200 day EMA was not validated technically.

Silver's price dropped below its 200 day and 20 day EMAs and is desperately seeking support from its 50 day EMA. Note that the bullish pattern of 'higher tops and higher bottoms' from the Mar '15 low of 15.25 is still in force. Bulls have suffered a setback, but may try to fight back.

Daily technical indicators are looking somewhat bearish. MACD is falling below its signal line in positive zone. RSI is seeking support from its 50% level. Slow stochastic has dropped below its 50% level, but its downward momentum has stalled.

On longer term weekly chart (not shown), silver’s price has managed to close exactly on its 20 week EMA, but is trading below its falling 50 week EMA, and well below its 200 week EMA in a long-term bear market. Technical indicators are neutral. MACD is rising above its signal line in negative zone. RSI is just below its 50% level and moving sideways. Slow stochastic is falling towards its 50% level.

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