Best of the Week
Most Popular
1.BrExit Looks Set to Win EU Referendum, Final Opinion Polls Give LEAVE Lead Over REMAIN - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit to Save Europe from Climate Change Refugee Migration Apocalypse - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.EU Referendum Latest Opinion Polls Show LEAVE Halting REMAINs Surge - Nadeem_Walayat
7.Gold And Silver – Insanity Is World “Norm.” Keep Stacking! - Michael_Noonan
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.Gold And Silver: Security, And BREXIT - Michael_Noonan
10.BrExit Vote - "The Trend is Set" -- And What You Should Pay Attention to Next - EWI
Free Silver
Last 7 days
FTSE and Sterling Brexit Trading, Deconstruction of the EU Referendum Result - 29th June 16
Stock Market Bounce May be Over - 28th June 16
Stock Market Meltdown Likely to Drive Gold Towards $1,500 - 28th June 16
Brexit Victory over the EU Globalists - 28th June 16
Brexit Psyop: Greenspan Falsely Blames the Brits for the Crash and Chaos to Follow - 28th June 16
Greenspan Calls Brexit a ‘Terrible Outcome’ as Euro Area Tested - 27th June 16
Stock Market SPX Below Mid-Cycle Support - 27th June 16
Best Holidays for Summer 2016 - 27th June 16
Another Stocks Bear Market? - 27th June 16
BBC EU Referendum Result Highlights - YouGov, Markets, Bookmakers, Pollsters ALL WRONG! - 26th June 16
Investors Map Post-Brexit Strategies Amid Global Market Upheaval - 26th June 16
Gold Price Weekly COT Update - 26th June 16
First the UK, then Scotland ... then Texas? - 26th June 16
Stocks Bear Market Resumes or Just More Noise - 26th June 16
Gold And Silver: Security, And BREXIT - 25th June 16
Dow, Euro & Brexit Recap - 25th June 16
Resistance Holding Gold Stocks after Brexit - 25th June 16
Venezuela vs. Ecuador (Chavismo vs. Chavismo Dollarized) - 25th June 16
Gold, Silver And PM Stocks Summer Doldrums Risk - 24th June 16
Here’s Why China “Economic Hard-Landing” Worries Are Overblown - 24th June 16
Jubilee Jolt: Markets Crash, Gold Skyrockets as Britain Takes Brexit - 24th June 16
BrExit Morning - New Dawn for Britain, Independence Day! - 24th June 16
LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - 24th June 16
Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - 24th June 16
EU Referendum Shock Results Putting BrExit LEAVE in the Lead Hitting Sterling Hard - 24th June 16
Final Opinion Poll Gives REMAIN 52% Lead, Bookmakers, Markets and Pollsters ALL Back REMAIN Win - 23rd June 16
Does BREXIT Matter? Outlook for Sterling - 23rd June 16
Keep Calm and Vote BrExit - Last Chance to Break Free of EU Superstate - 23rd June 16
Here’s the Foreign Policy Trump and Clinton Really Want - 23rd June 16
Details Behind Semiconductor Stocks Leadership - 23rd June 16
Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - 23rd June 16
BrExit Looks Set to Win EU Referendum, Final Opinion Polls Give LEAVE Lead Over REMAIN - 22nd June 16
Proof that the Gold Bears are Wrong - 22nd June 16
Here’s a Trillion-Dollar Investment Opportunity for Those Few with No Debt - 22nd June 16
BrExit to Save Europe from Climate Change Refugee Migration Apocalypse - 22nd June 16
Increase In U.S. Rig Count Will Not Cap Oil Prices - 22nd June 16
Are Copper and China Stocks Set to Rally? - 22nd June 16
SPX May Break Its Trendline - 22nd June 16
Believe it or Not: More Kids Live At Home Now than Since The Great Depression - 21st June 16
EU Referendum Latest Opinion Polls Show LEAVE Halting REMAINs Surge - 21st June 16
British Pound Outlook - BREXIT, Europe and You - Does your vote matter? - 21st June 16
Fascist Victory Behind the European Union - 21st June 16
EU Referendum Opinion Polls Analysis Shows Strong Momentum in REMAINs Favour - 21st June 16
Is It Time to Dump Gold and Buy Platinum? - 21st June 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Market Volaility

Gold and Silver Price To Rally Or Not To Rally

Commodities / Gold and Silver 2014 Oct 13, 2014 - 07:12 AM GMT

By: Austin_Galt

Commodities

Both gold and silver rallied nicely off their lows the past week. So, is this the start of something bigger or just another blip in a doom and gloomy bear market? Let's have a look at the charts to find out. We'll begin with gold.


Gold Daily Chart

Gold Daily Chart

The move off the recent low looks impulsive with a big bullish candle leading the charge.

The Bollinger Bands show price in a washout move into low below the lower band before a sharp reversal higher which subsequently hit the upper band. From here it is possible to continue on up clinging to the upper band in super bullish style. However, keeping in mind that this move up is against the trend, I favour price action to be a bit choppy and hence trade back down to the lower band and consolidate the recent move up.

This move up busted two previous minor swing highs which is a good sign for the bulls. So we have a higher high and now all that is needed is a higher low and it will be up, up and away. Well, as high as a bear rally can fly.

The Relative Strength Indicator (RSI) and Stochastic indicator are both trending up and showing bullish divergences while the Moving Average Convergence Divergence (MACD) indicator is also looking quite bullish with the blue line above the red line which also comes on top of some nice bullish divergences.

Gold Weekly Chart

Gold Weekly Chart

The weekly Stochastic indicator shows a recent bullish crossover while the MACD indicator looks to be threatening one but still has a bearish bias. So the jury is still out on any continuation of the rally.

The recent low around US$1184 was right at triple bottom support so there is a strong foundation here for a big rally to commence.

I have added an Andrew's Pitchfork using the June 2013 low for the base and the August 2013 high and January 2014 low for the upper and lower channels. We can see the recent move up failed to get back up into the lower channel. This shows gold to be in a weak position in line with the overall bear trend.

I have added Fibonacci retracement levels and I'm expecting this rally to eventually get up to the 76.4% level at US$1373 and challenge the March 2014 high at US$1387. I expect the challenge to fail and a move back down to bust the triple bottom which would lead to a capitulation type move into final low.

I have drawn a black trend line across the tops of August 2013 and March 2014 which should be cracked in a fake out move to bring out the bulls prematurely.

While I believe the rally to be underway, I favour a pullback first before the rally really kicks into gear. I actually think price can retreat all the way back to around last week's open price of US$1188. Let's see.

Silver Daily Chart

Silver Daily Chart

The RSI, Stochastic and MACD indicators are all basically mirroring that of gold - bullish divergences in the RSI and Stochastic while the MACD is looking bullish.

Even so, silver looks to be in a much weaker position than gold. Why?

Price has failed to take out a previous swing high on this move up. Also, price does not seem to be exhibiting the same impulsiveness that gold is showing.

The Bollinger Bands show price not being able to get up to the upper band and only seems to be milling around the middle band. It looks like one last low is in order which breaches the lower band just as the recent gold low breached it' s lower Bollinger Band.

Given this, I favour one last move back to a new low before the silver rally can commence in earnest.

Silver Weekly Chart

Silver Weekly Chart

The Stochastic indicator shows a recent bullish crossover while the MACD indicator looks to be threatening one but still with a bearish bias a la gold.

As with gold, I have added an Andrew's Pitchfork which demonstrates how much weaker silver is compared to gold. I have used the same low and high points to construct the pitchfork and price never looked likely to get back up into the lower channel.

Also, price is already finding resistance from the trend line drawn across the August 2013 and February 2014 highs. Perhaps price will crack this resistance on its next attempt.

I have added Fibonacci retracement levels from the move down from August 2013 high to recent low. While I suspect the low is not yet in, I expect only marginally lower which won't have any significant impact on this analysis. As with gold, I'm looking for a rally up to the 76.4% level which currently stands around US$23.

I have drawn two black parallel lines which form a downtrend channel which I suspect is about to form. Perhaps I'm being a bit presumptive here. Let's call it forward thinking! The upper trend line looks close to intersecting the 76.4% Fibonacci level and it is here where I expect the silver rally to eventually terminate.

In concluding, I am expecting a big rally in both gold and silver. It is my opinion that the gold low is in already but is about to be tested while silver needs one last marginal low before it's rally can begin.

By Austin Galt

www.thevoodooanalyst.com 

Austin Galt is The Voodoo Analyst. I have studied charts for over 20 years and am currently a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts, there seemed to be a dearth of technical analysts. My aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

My website is www.thevoodooanalyst.com 

© 2014 Copyright  The Voodoo Analyst - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife