We now have a new short term downtrend in gold with a confirmed lower high and lower low. Price fell through light support at 1532 and finally found support at 1518. In doing so it cut through the first level of support at the 18 day moving average, which was the initial target after stochastic losing the embed (3 day above 80). The next moving average providing support is the 45 day moving average, currently at 1511. The next layer of support is at 1486. Resistance is now the former support level of 1532.
The 45 day moving average should provide strong support and along with the Bollinger band should contain downside potential on this downward pulse. Look for a possible move to 1486 after a lower high than 1542. RSI and stochastic are both dead neutral. It appears the summer doldrums are here until something significant happens to spike volatility. The Bollinger bands are contracting and show volatility is declining.
Our 100% real and allocated gold bullion fund penetrated strong support at 13.16 and closed at another support level being provided by the 50 day moving average. Technically we have a neutral chart with a higher high and a lower low. This type of pattern is indicative of indecision and consolidation. A relief rally that sets a lower high would confirm a new downtrend. Further support is coming from both the Bollinger band and the 100 day moving average around 12.71. Resistance is the failed support level at 13.15.
To confirm a new uptrend, the most recent high of 13.68 would have to be taken out. This is a long way away and is unlikely in the short term. Therefore, at best we are looking at a sideways trading range this week. Worst case is that the 50 day moving average fails to support and price slips down into the lower trading channel defined by 13.16 and 12.40.
Silver is presenting a very bearish chart. Price never made it back to the 45 day moving average after the crash and has now penetrated the 100 day moving average for the second time. The Bollinger band is the next level of support and will at to constrain further price moves lower. Major support lies just below that level at 33.53. Where gold was showing mostly neutral technical studies, silver is approaching over-sold status with an RSI of 40 and stochastic of 36. Resistance is now at the failed support levels of both the 100 day moving average at 35.89 and the swing low of 36.19. The trading range appears defined between major support at 33.53 and major resistance at 38.48.
The 100% allocated and real silver bullion fund penetrated support 16.20 and is approaching major support at 15.00. Resistance is the failed support level of 16.20. A shot term downtrend is in place defined by a series of lower highs and lower lows off of the 18.03 high. As with silver, the technical studies are nearing over-sold territory and risk for long position entry is diminishing. Look for a higher low as a possible entry point with a stop just below the previous swing low. PSLV may also be setting up a sideways move between major support and major resistance defined by 15.0 and 18.03 respectively.
The longer term chart for PSLV shows how important the support level at 15 is. Price is now below the Fibonacci 61.8% retrace level for entire silver breakout. More times than not, if this level is breached a 100% retrace will result. This is of course a purely technical view and does not consider changes in the fundamental picture. If nothing changes on that front, a 100% retrace could be expected. What are the odds that something changes soon to modify the fundamental picture? That is the question of course and is why you must be nimble to trade silver and willing to use tight stops. I like a PSLV trade here at major support with a stochastic cross from over-sold territory and a touch of the 30 level on RSI.