Gold and Silver – 17 May

Gold broke lower today out of the consolidation triangle that had formed over the last week or so. Price found support around the 1470 level depicted on the chart, then rallied and closed well off the low. 1470 remains support with resistance still coming in around 1520. RSI is neutral, with stochastic and MACD heading lower. We are definitely going nowhere in particular and taking our time getting there. I sense that the markets have a general feeling that nobody has a clue what the Hell is going to happen next and a general risk off trade is permeating all markets. That means cash or cash equivalents will be popular. Someday soon that will be gold, period. It will be the risk off trade par excellence.

The longer term chart shows the Fibonacci levels and how price bounced right at the 38.2% retrace level. Also this level corresponds to the 45 day moving average (blue). Failure to find support here puts the Fibonacci 50% retrace level in play at 1440. This level is also providing significant chart support going back to the first week in March.

Here’s the long term picture. Within this context it would seem 1450 is certainly possible, if not likely.

Silver closed slightly higher after, like gold, it made a lower low. Price closed just above support at 33.50. I still see a play for the 200 day moving average, especially if the swing low at 32.31 gives way on this current swing low. RSI is hanging out near over-sold territory but has room to move lower. Stochastic will embed tomorrow short of a significant rally. Embedded stochastic suggests continuing momentum to the downside, where rallies are selling opportunities.

Here is the longer term chart and some silver perspective. Price is finding support at the Fibonacci 50% retrace level of the entire move off of 18. The extreme technical situation the chart had depicted has been completely worked off. RSI and MACD have not been this low during the entire duration of this 1 year chart. If support fails here, there is a little support around 32 and some more at the Fibonacci 61.8% level around 30.

To get back into the primary trend channel price would need to come all the way down to the 200 day moving average, and then it would only be touching the upper boundary of the channel. So a move to the 200 day moving average would not be the end of the world. In fact, to get to over-sold areas on RSI it might take require a full 100% retracement of the last move off of 27.50. That would also put silver back into the middle of the trend channel.  All corrections on this chart have found support at the 200 day moving average and therefore lends credence to my belief that we will see a run to that moving average.

This entry was posted in Gold, Matrix Sentry TA, Silver, Technical Analysis. Bookmark the permalink.

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