Forex Trading Library

Precious Metals – Weekly Technical Analysis, 21/10

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Gold and Silver prices have been trending lower to flat this week. Gold is currently up 0.12% while Silver has declined -1.45%. While previously, a weak US Dollar helped the metals to recover some of their declines the recent recovery in the Greenback is likely to keep the precious metals market on the edge in the near term.

In Gold, the weekly chart which gives a medium to long term time frame offers some interesting insights. The weekly chart for Gold shown below, points to a large consolidation triangle with prices breaking out to the upside off the support/resistance level at 1156.33. A continued follow through from the triangle breakout could see prices eventually rally to 1223.5 and to 1296.1 in the longer run. However, a retest to the support/resistance level at 1156.33 would cement the upside view. The minor dashed trend line connecting the recent lows is an indication for any potential break down of prices.

XAUUSD – Weekly Chart: Triangle Breakout
XAUUSD – Weekly Chart: Triangle Breakout

The Stochastics indicator also shows a hidden bearish divergence currently in play which shows a confluence for a decline to the downside.

On the daily charts, the price action is a bit more pronounced. Firstly, a top has been formed near 1191.63 marked by the doji candlestick which was followed up by a close below the doji’s low. However, with support at 1170.26 through 1164.7, Gold could potentially trend sideways before a break down below this support which could potentially see Gold test previous lows at 1139.73. Yesterday’s candlestick closed with an outside bar and this could indicate a break out in either directions. Watch for 1164.7 which could signal a decline lower to 1134.2.

XAUUSD – Daily Chart: Potential decline to support
XAUUSD – Daily Chart: Potential decline to support

There is also the steep ascending triangle pattern shown on the chart which indicates a minimum decline to 1155 – 1153 region of short term support. This price zone also marks the weekly chart’s breakout level from the triangle pattern.

The weekly charts for Silver also points to a similar set up in prices with the breakout off the descending triangle pattern. Support at 15.64 is a strong level which is likely to be tested for support in the near term ahead of a potential rally to 17.55. In the longer run, major resistance at 18.92 remains a level that can be tested.

XAGUSD – Weekly Chart, Triangle Break out
XAGUSD – Weekly Chart, Triangle Break out

On the daily charts for Silver, price action has been largely consolidating above the 15.64 support handle and a lower close near this level will potentially trigger a rally to 17.55. However, the pending retest to 15.2 through 15.1 is a likely level that Silver could dip to ahead of the rally.

Silver: Daily Chart: Retest to 15.2 support
Silver: Daily Chart: Retest to 15.2 support

Looking forward there are not much of market moving events as far as the precious metals are concerned. The big moves are likely to come in next week which will see the October FOMC as well as the US GDP numbers being released.

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