Gold futures well supported near $1200
After yesterday’s testimony to the senate banking committee from the Fed Chair Janet Yellen, the US Dollar continues to ease back from its rally, providing some relief to Gold futures. Price actions shows that the recent declines seem to be well supported near the main support level of 1200 through 1197 level, which falls quite close to the neckline of the inverted head and shoulders pattern that we noted few weeks ago.
Ideally, a bullish close on the daily charts would give the first indications of the support level holding the decline, however, a weekly bullish could help further strengthen the bias.
Should we notice prices rebounding from the 1200 level, the upside target could be a retest of the minor support/resistance at 1230 followed by a retest towards 1240 through 1250 levels.
From the H4 chart time frame, price seems to have broken out from the falling price channel and looks currently to retest the breakout level near 1203 through 1200 levels. A successful retest on the 4-hour chart would give an early indication of a potential rally that could follow with the objective of targeting 1230 followed by 1250 levels.
From the weekly perspective, Gold prices declined continuously for the past four weeks and with a price reaching a multiyear support zone near 1200 through 1170 levels, we could well expect another attempt to bounce off this level. Also considering the fact that the larger inverted head and shoulders pattern is still in play, there is a credible chance for Gold to rally as much as to the $1300 level as well, provided the bullish momentum continues to hold and help in breaking the support turned resistance levels on the leg up.
In the larger perspective of things, this move to the upside in Gold could possibly be the final attempt to push higher before the bearish trend takes over. However, timing will be of the essence.
Silver – 16.80/17.3 level could be critical
With Silver futures, price action continues to look bearish within the short to medium term as we notice the current rally towards the 16.8 level being a retracement of the breakout level. Should the support/resistance level near 16.8 through 17.09 be successful in holding any further rallies in Silver, we could potentially be looking at an eventual target of 15 being achieved within the next few months.
The 4-hour chart, however, does point to a possibility that Silver futures could also look to a rally in the near term. In the chart below we notice that while price has been trading within the falling price channel, we see a consolidation pattern taking shape in the form of a falling triangle. This pattern gives an upside target towards 17.229, well above the broken support at 16.88.
Within both the time frames, we do notice that price action, for the moment looks ideal for a retracement but no higher than 17.3 levels before we can expect the bearish trend to resume.
