Technical Update for Gold and Silver

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Is Gold Topping off from the New 2012 High? (10/10)

Silver Approaching Range Support; Failure can Lead to a Double Top (10/10)

Gold Daily chart 8:22PM EDT 10/14/2012

gold 10/14/2012 daily chart

 

Failed Wedge: Gold has been stalling its rally since testing the 2012 highs around 1790. After breaking to 1795.80, it appears gold may have topped off, or is at least in an apparent consolidation. The daily chart shows the precious metal priced in USD forming a rising wedge. However, it failed to bounce off the projected support for another upswing, and instead fell sharply to start this week (10/15). The RSI was in a bearish divergence in overbought territory, but has already resolved that.

Momentum: Now, the RSI is near 40, so if the gold market is in consolidation, we might see some slowdown, or support in the near-term, for the rest of this global session (10/15).

If on a subsequent pullback, the RSI can be held under 60, preferably under 50, this nascent bearish momentum from the 1795.80 high is still intact. If price can hold under the projected falling trendline seen in the 4H chart, the market should continue to focus on some of the lower support pivots. These support pivots are 1736 and 1715.22.

Gap: This MT4 chart is showing a gap. Many retail trading platforms will show this gap, meaning prices changed over the weekend, while these platforms did not upgrade price. It was more than a $10 gap – one that deserves attention.

Gold 4H chart 8:25PM EDT 10/14/2012

gold 10/14/2012 4H chart

 

Silver Daily chart 8:32PM EDT 10/14/2012

silver 10/14/2012 daily chart

Silver was spotted developing a double top last week, and starts this week completing it by falling under the pattern support of 33.28. The daily chart shows a double top breakout projection roughly to 31.22. A slightly more aggressive projection would be to the next possible support factors of 50% retracement at 30.74, and the 200-day simple moving average slightly lower.

The daily RSI is also at 40, which means if the market is in consolidation, there should be some support here in the near-term. (rest of the session or a little more).

A pullback should really not go back above the projected falling trendline. Holding price under it is a sign of silver bears taking over. A break above the central pivot area around 34.20-34.35 could be taken as a sign of a false breakout to the downside, which suggests a rally to test the previous high of 35.38.

Silver also shows a downside gap of about $0.50. Although gold fell more in price, silver fell more percentage wise in the gap.

Silver 4H chart 8:38PM EDT 10/14/2012

silver 10152012 4h chart

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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