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Tuesday, March 22, 2016

Gold and Silver charts: an update

Gold chart pattern


The daily bar chart pattern of Gold bounced up with strong volume support after a pullback to the top of the 'symmetrical triangle' on Thu. Mar 10 '16. The next day, it rose to touch a new 52 week high of 1288, but formed a 'reversal day' pattern (higher high, lower close) and corrected below its rising 20 day EMA and the 1230 level.

All three daily technical indicators touched lower tops (marked by blue arrows) when gold's price touched a new high. The combined negative divergences may have triggered the 60 points fall.

Just when it seemed that an 'end run' below the triangle was starting, gold's price bounced up to touch a lower top of 1270, formed another small 'reversal day' pattern on Thu. Mar 17, and dropped to seek support from its 20 day EMA.

Two of the daily technical indicators - MACD, RSI - are showing downward momentum but remain in bullish zones. Slow stochastic has dropped below its 50% level. Some more correction is likely.

On longer term weekly chart (not shown), gold’s price has dropped below its 200 week EMA after a brief sojourn above it. Weekly MACD and Slow stochastic are inside their overbought zones, and hinting at a possible correction. RSI is moving down after facing resistance from the edge of its overbought zone.

Silver chart pattern


The daily bar chart pattern of Silver started rallying after forming a 'cup and handle' pattern. The 20 day EMA has crossed above the 200 day EMA, and the 50 day EMA is trying to follow suit.

The 'golden cross' of the 50 day EMA above the 200 day EMA will technically confirm a return to a bull market. However, the formation of a 'reversal day' pattern (higher high, lower close) on Fri. Mar 18 '16 may have given a boost to bearish hopes.

All three daily technical indicators touched lower tops (marked by blue arrows) when silver's price rose higher. The combined negative divergences may end the rally.

Also, trading action during the past 5 weeks may have formed a bearish 'rising wedge' pattern, from which a downward breakout is likely.

On longer term weekly chart (not shown), silver’s price closed above its 20 week and 50 week EMAs but well below its falling 200 week EMA, and remains in a long-term bear market. Weekly technical indicators are in bullish zones. Slow stochastic has entered its overbought zone for the first time since Oct '15. 

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