Forex Trading Library

Gold & Silver Update FOR 19th January

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Gold Futures – Technical Update

Gold & Silver futures got a boost last week, thanks to the Swiss shocker. The Swiss Franc, often considered to be a currency proxy for Gold especially strengthened dramatically as the Swiss National Bank announced that it would no longer defend the peg to the Euro, thus effectively free floating the Swiss exchange rate.

While the US Dollar suffered a setback, Gold futures managed to rally rising as much as 1267 upon the SNB’s announcement. The precious metal however is starting to enter a consolidation phase as we currently notice. However, more gains to the upside can be expected as long as the support level near $1200 holds, which seems to be very likely at this point.

The daily chart for Gold shows that the Swiss injected rally managed to push Gold to the support/resistance level that was previously identified. We notice the next immediate support coming in at $1230 levels. If this support holds, a rally to $1313 looks imminent, depending on how the resistance at $1250 – $1260 is broken.

Gold & Silver

In the event the support at $1230 breaks, the next major support falls at $1187 – $1183 regions, which would weaken the bias to the upside, but would still put Gold prices aiming for the upside. The weekly charts show last week’s bullish candlestick following through after the previous week saw a bullish engulfing pattern, thus validating a continuation of an upside move in Gold prices.

In the longer term, the monthly charts at this moment point to the next two major levels that Gold futures could contest. The immediate support/resistance level comes in at $1327.3, followed $1394.5. As long as these two resistance levels hold, from the longer term, Gold could still be called to be in a bearish decline.

Gold & Silver

 

Silver Futures – Technical Update

Silver futures also managed to take advantage of the Swiss shocker. The weekly candlesticks, last week has formed an almost doji like candlestick pattern. The appearance of the doji after previous week’s bearish candlestick is probably indicative of a change in sentiment. The upside bias for Silver futures comes from the bullish piercing line candlestick formation, four weeks ago.

If this analysis holds true, we could expect a rally to test the major support/resistance level at 18.58 levels, which so far hasn’t been contested.

Gold & Silver

From the monthly perspective, with the last month, December 2014 forming a doji type of a candlestick, a close above the high at 17.32 (last month’s high) could further validate the bullish bias.

It will be interesting to watch how price reacts at the major level of 18.58. A close above this level, which will make it into a support level, could see Silver futures have enough room to target 26.11 (in a very long term). However, should we see price fail to break the level of 18.58, we could potentially expect a resumption of the bearish trend in Silver futures.

Gold & Silver

The current short term strengths in both Gold and Silver, however is mostly due to the Dollar Index showing signs of weakening in the near term. Considering the massive and strong rally the Dollar Index has enjoyed so far, a correction was but expected. While this week does not see any major news releases from the US, next week’s FOMC statement should help bring a sense of direction into the above two metals.

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