Gold and Silver Technical Overview

Led by the recent weakness in the US Dollar, both the precious metals, Gold and Silver, rose for a third straight trading session on Thursday to settle at their highest level in nearly 3-months. Both the precious metals area now headed for a yet another week of gains. Given the backdrop here is a technical overview as to how they are likely to move in the near-future.

GOLD

As is visible on daily chart, the yellow metal has been oscillating within a trading range between 23.6% and 50% Fib. retracement level of Jan. highs to March lows down-leg for nearly 2-months. On Thursday, the metal tested the upper end (resistance) of the trading range, marked by 50% Fib. retracement level. Thursday's up-move was significant as the precious metal managed to provide daily closing above 200-day SMA for the first time since early Feb. The metal, however, is now reversing from 1225 area, providing further evidence of a strong resistance near 1225 level. Hence, in order to make any further near-term up-move the metal need to decisively strengthen above 1225 resistance area and a decisive move above this strong resistance now seems to clear path for an immediate rally towards its next resistance near 1245 level, marking 61.8% Fib. retracement level. Meanwhile on the downside, 38.2% Fib. retracement level near 1205-1200 region now seems to protect immediate downside and failure to hold this immediate support would further support continuing near-term range-bound movement, thus dragging the yellow metal back towards the lower end (support) of the trading range near 1180 area, marked by 23.6% Fib. retracement level.

SILVER

The white metal managed to provide a daily close above 200-day SMA for the first time since early August 2014 but has relatively outperformed Gold, providing a close above 200-day SMA on Wednesday, a day before, and is now headed for its third consecutive week of gains. The relative out-performance is likely to continue in the near-term and until the metal continues holding above 200-day SMA support, currently near 17.00 mark, it could possibly make an attempt to test 17.80 immediate horizontal resistance. A decisive move above 17.80 resistance now seems to set the stage for retest of 2015 high level resistance near 18.50 region. This 18.50 resistance area also coincides with the upper trend-line resistance of a well-established descending trend-channel formation on daily chart and hence becomes a very important resistance in order to trigger any further near-term up-move. Meanwhile weakness back below 200-day SMA support seems to drag the metal back towards 16.60-50 horizontal support area and the weakness could further get extended towards a very important support near 16.00 round figure mark. Moreover, reversal back below 16.00 mark would negate the possibilities of any near-term up-move and increase the metal's vulnerability to further downside, possibly back towards 15.00 psychological mark support and possibly even towards 14.25 level, multi-year low touched in Dec. 2014.

 

Haresh Menghani
Senior Market Analyst
Admiral Markets
 
At any use of the analytical material taken from the site of company Admiral Markets, and the secondary publication on any other resources, the rights to intellectual property for a dealing center «Admiral Markets», reference to the company site is obligatory.

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