Gold & Silver Weekly; Syria Premium Discounted
The very first thing that we would like to highlight is a possible reversal in the weekly outlook on both gold and silver charts. Technically, both metals posted a gravestone doji on the weekly chart after an impressive run up. Followers of candlestick will argue such patterns as an early warning signal. Elliott wave theorists argued otherwise, as they see further upside and this is only a corrective wave 4 before uptrend resumption continues to target the upper channel line (see chart below). Both argument stands as a valid scenario but it all depends on the price action.
Geopolitical tension has eased and thus the corrective rally is stalling. Next week Federal Reserve meeting is an important landmark where tapering will happen and the question now is how much to taper. Rumours among the media agencies and analyst are as good as anyone’s guess - with a range of $ 15 billion reduction to as much as $ 35 billion. The build-up to tapering week will garner some downside interest and it will be a healthy pullback for both metals. Looking ahead though, Syria will continue to be a problem child and such scenario will provide support on safe haven assets. We are making the case that in the short term we see continue pressure on the downside on gold and silver but both will find support before resuming higher. Both market seems to setup for “sell the rumour, buy the fact” scenario.
Gold Technical Outlook
Weekly
Chart
Gold
needs to take out previous high of $ 1430 and break higher to have
wave 5 completed and only a break below $ 1340 will reignite
additional bearish scenario. The upside seems rather limited after
the break above $ 1430 with various resistance levels at $ 1455
(upper channel line and possibly top range of the Bollinger band that
will act as resistance). It could mark the end of the corrective wave
and we foresee a pullback should gold try to take out $ 1480 level.
With such scenario, the weekly chart paints such possibility for gold
to try $ 1455 level before resuming lower. Otherwise, the high at $
1430 level may have been the top and bearish resumption could play
out from here but it will be ideal for another run up before pulling
back. RBC chief analysts George Davis made similar arguments “using
short term rallies to the $ 1427 to $ 1487 level as a selling
opportunity with stop loss at $ 1530 to target a return move to $
1275 and $ 1200 eventually”.
Resistance: $ 1434, $ 1455, $ 1525 Support: $ 1353, $ 1275, $ 1210 |
Traders Notes:
Short at $ 1345 stop $ 1353 target $ 1300. Long
at $ 1356 and $ 1366 stop at $ 1348 target a rebound to $ 1430. Long
position at 1366 is in effect.
Short Term (1 - 3 weeks) | Medium Term (1 - 3 months) | Long Term (6- 12 months) |
Bullish - target 1475 | Bearish - target 1353 | Target $ 1500 / $ 1600 |
Silver Technical Outlook
Weekly Chart
Silver
corrective rally (based on the weekly chart) stop at the top of the
falling Bollinger band. Current setup seems to indicate that the
Bollinger band is trying to converge and the ideal midpoint for price
action lies above $ 21 and below $ 22.50 level before a breakout
ensue. The 10 DMA has crossed above the 20 DMA but remains fragile
with the RSI trading below the 50 level and going flat (proving that
the 50 level is resistance for now). Other indicators such as the
MACD has crossed higher but still in negative territory. The current
corrective rally has retraced below the 23.6% retracement from its
low and next support stands at 38.2% retracement at $ 22.50 followed
by a possible retest at $ 21.80. Should it break below $ 21.80, a
revisit to $ 18.90 is in the bag followed by a possible new low for
the year.
Resistance: $ 25.12, $ 26.90, $ 27.35 Support: $ 23.10, $22.50, $ 21.50 |
Traders Notes: Buy if break $ 24.75 and add on the break of previous
high. Short trade has hit stop that was moved below breakeven. New
short if it breaks and close below $ 23.00.
Short Term (1 - 3 weeks) | Medium Term (1 - 3 months) | Long Term (6 - 12 months) |
Retest $ 22.00 and $ 21.70 area | Expect consolidation to retest support at $ 22.70 | Bullish - a potential bull run? |
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09 Sep 2013 | Categories: Gold