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Previous Post for Gold and Silver (1/28): Choppiness Increases Around Support Areas; Corrective Rally?

Gold (XAU/USD)
Gold

- Gold is acting as anticipated from the previous gold update on Friday. Friday's high held, and the market is in a decline, that is now being supported above the 1323, 61.8% retracement level.
- Another rally that breaks above the current resistance at the 1350 area, should create a reverse head and shoulder.
- Still the rally has resistance near 1361, which is a swing projection, and also the 61.8% retracement area.
- The count is that this is a corrective rally, but if global uncertainty returns, gold can return for another bull run.
- This is premature, so let's see what happens to this possible c wave up. If the market accelerates, then a decline fails to break below 1350, we are either in very significant correction rally, or the bulls could have taken over. The first upside target above 1361 is 1380.
- There is also the scenario, where the market declines below 1309 without extending the current correction higher. The intermediate term targets below that are 1292 and 1265.

Silver (XAU/USD)
Silver

- Silver had trouble breaking the 161.8% expansion, 38.2% retracement and 2SMA in 4H chart. This resistance cluster at 28.40 was respected and the market followed with a decline.
- The decline is supported above 27.50, and the moving averages in the 1H chart.
- There is still a bullish bias to this pair in the very short-term.
- If the 28.40 level is broken, we might have a rally to 28.75, the 50% retracement and SMA200 in the 4H chart.
- Above 28.75, we have the 29.40, the 618% retracement level.
- Most likely this is a corrective rally. If the market is to turn bullish, the current resistance at 28.40, should eventually become support to develop a base and to follow Elliott Wave Principles.

Will gold and silver continue lower after the current correction? We would love to know what you think.
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Fan Yang CMT
Chief Technical Strategist