Gold Futures – Technical Update
Gold futures managed to keep its short term bullish rally albeit some signs of fading momentum. Price action failed to rally towards the inverted head and shoulders pattern’s objective price target of $1315 but instead turned lower near the $1300 mark. Current price action for the past week has been largely ranging with the daily charts for Gold showing a triangle consolidation pattern being form. Such patterns usually indicate a potential break out that is to happen.
While Gold sits comfortably above the major support level at 1254 – 1240 levels, we expect a break out in either direction quite possible. To the downside, by means of the measured moves, we can expect a decline towards 1200 level, which incidentally comes as a retest of the inverted head and shoulders pattern’s neckline, as well as a marked support zone.
Alternatively, if we see a break out to the upside, we expect price to easily target $1315 pushing as high as towards $1325 levels. Another view would be to consider the consolidation as a continuation bullish pennant pattern. In such an event, we see a further upside targets towards 1375, provided the support at 1250 – 1230 holds.
From the longer term charts, the weekly charts show a strong pin bar at the top, which sort of qualifies for a hanging man pattern. However, given the shape of the weekly candlestick, it will be a tough call at this point, unless we see this week closing lower. From the monthly charts, price action has pretty much retraced back to the break out of the major trend line, which puts the longer term bias as bearish for Gold unless we see a monthly close back above $1300 – 1350 levels.
Silver Futures – Technical Update
Silver futures look bearish considering the previous week closed on a very bearish note and in the process forming a bearish engulfing pattern. However, considering that last week’s low was right near the marked support at 16.84 is indicative that we could see a bounce unless there is a strong close below 16.84.
The pattern near the lows however gives early clues of a basing pattern being formed. This indicates that prices could see 16.80 levels as most likely a support/resistance level. So in the event of a bounce from here, we could expect to see a correction in Silver futures.
When looking to the daily charts, we notice that reversal started after the doji appeared near the interim top. Current price action is showing the possibility of a bullish pennant pattern, which could also be viewed as a bearish flag, depending on the number of candlesticks being take into consideration. Regardless of the confusion, unless we see a strong base being formed near the regions of 15 – 16, it would be best to stay aside from Silver futures for the moment.
