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Silver and Gold Technicals: 11/11

by on November 11, 2013 9:42 pm GMT
 

Precious metals were lower on the day in the aftermath of a potential taper from the Federal Reserve with gold losing over $23 per ounce, and silver lost .33 cents per ounce. Both precious metals are trading into potentially important technicals that may provide the catalyst for a continuation downward.

Silver has be trading into a consolidation pattern and trending in a sideways channel. Price action is  looking to test the lower support of the channel at $21 per ounce. Currently trading at $21.33, silver may test these key round-number level. Furthermore, a break of this channel will push silver below $21, a level not seen in almost a month.

A secondary triangle pattern is also visible, and the lower ascending trend line meets up with the lower trend line of the channel. The double pattern support could give silver more support at $21. The 20 EMA is started to trade below the 50 EMA signaling bearish sentiment.

A Fibonacci retracement of the nine month high and low shows 78.6 and 61.8 levels acting as the sideways channel, which could further confirm support at $21.06

A break below $21 could free up a path to $20.55 and $19.20 per ounce. A pullback would likely be capped at the convergence of EMAs near $21.90.

1D Chart of SI with Fibonacci Levels

1D Chart of SI with Fibonacci Levels

1D Chart of SI with Sideway Channel

1D Chart of SI with Sideway Channel

Gold continues to trade below $1,300 per ounce and has fallen out of love with hedge funds as net-long positions were reduced and changed to net-short. The yellow metal dropped $24 an ounce on the session and is showing indication that a further drop is coming. Price action is trading into the mid-way point of a downward channel.

Support is lying at $1,250 with the lower trend line resting at $1,225.75. Erratic pullbacks in gold happen often, and a pullback could see movement to $1,320.80. However, the on-again, off-again traders’ relationship with gold looks to be off-again.

The 20 and 50 EMA are beginning to slope downward along with the aggressively sloping RSI, currently at 37. The ADX is much stronger in gold than silver. The ADX is slightly above 20 but looking to trend higher. There is a large divergence in +/-DMI with -DMI trending above 26.

1D Chart of GC

1D Chart of GC