Gold and Silver charts: upward breakouts from ‘cup and handle’ patterns face resistances


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Gold chart pattern

The daily bar chart pattern of Gold has broken out upwards from a large ‘cup and handle’ consolidation pattern. What had looked like a downward breakout from a ‘symmetrical triangle’ pattern (refer previous post) turned out to be the formation of the ‘handle’ on a longer time frame.

Gold’s price dropped below its 20 day EMA, but bounced up after receiving support at the 1275 level – completing the ‘handle’ formation. A sharp rally to 1330 was followed by a bit of profit booking.

All three EMAs are rising, and gold’s price is trading above them in a bull market. The ‘golden cross’ of the 50 day EMA above the 200 day EMA last month had technically confirmed a return to bull territory.

Daily technical indicators are in the process of correcting overbought conditions. MACD is rising above its signal line inside overbought zone. RSI has slipped down from its overbought zone. Slow stochastic is ready to do likewise.

MACD and Slow stochastic are showing negative divergences by touching lower tops, which may have provided an excuse for profit booking.

Fears of a global economic slowdown, if not a recession, pushed the US Dollar index below 95 – triggering the upward breakout above the ‘cup and handle’ pattern.

On longer term weekly chart (not shown), gold’s price closed above its three weekly EMAs in long-term bull territory for the sixth straight week. Weekly technical indicators are looking bullish and overbought. MACD is rising above its signal line in bullish zone. RSI is facing resistance fro the edge of its overbought zone. Slow stochastic is rising inside its overbought zone. A pullback towards 1300 is a possibility.

Silver chart pattern


What had looked like a down trend on the daily bar chart pattern of Silver (refer previous post) turned out to be the formation of the ‘handle’ of a large ‘cup and handle’ consolidation pattern.

Silver’s price dropped below its 20 day and 200 day EMAs, but bounced up after receiving good support from the 15.20 level. A sharp upward breakout above the ‘cup and handle’ pattern faced resistance from the 16.20 level.

Silver’s price has dropped to seek support from its rising 20 day EMA, and closed above its three daily EMAs in bull territory. The ‘golden cross’ of the 50 day EMA above the 200 day EMA – which will technically confirm a bull market – is awaited.

All three daily technical indicators showed negative divergences by touching lower tops, and are showing downward momentum after correcting overbought conditions. Some more correction or consolidation is likely.

On longeer term weekly chart (not shown), silver’s price closed above its 20 week and 50 week EMAs, but below its falling 200 week EMA in a long-term bear market. Weekly technical indicators are in bullish zones, but not showing much upward momentum. 

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