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Gold & Silver Charts – When Will Trading Get Better?

Gold & Silver Charts – When Will Trading Get Better?

2018-05-31 12:30:00
Paul Robinson, Currency Strategist
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Gold/Silver technical highlights:

  • Gold stuck between range-break, LT trend-line
  • Silver chart is messy, broader triangle building
  • For now, patience required until something gives

Traders are long gold, check out the IG Client Sentiment page to see how this acts as a contrarian indicator.

Gold stuck between range-break, LT trend-line

Difficulties in trading gold, at least for those looking to capture a discernable trend, continues with the precious metal unable to sustain momentum in either direction. In the middle of the month gold made a strong break out of a multi-month range, only to have trend-line support from December 2016 stifle downward momentum.

With a modest bounce developing off of trend support, the bottom of the range is under attack in the low-1300s. Adding further stickiness to this area is the 200-day MA running just overhead.

What is a trader to do here, with support just below and resistance at hand? Is the up-move a retest of the bottom of the range before a resumption of the range-break, or is the hold of the trend-line a sign of a soon-to-resume trend higher? Or, could another sideways ‘chop-fest’ be underway?

More questions than answers.

You would have thought by now with the dollar having made a strong move recently that precious metals, too, would have finally freed themselves up. Last year didn’t present a great year of trading, but at least there were sustainable multi-week moves.

The simple answer to attacking this mess, at least to this market participant, is to not attack it at all until better clarity. Things will eventually free up and a path of least resistance will become clearer, but until then there are better opportunities in other markets.

Gold Daily Chart (Stuck between Support & Resistance)

Gold daily chart with range and trend-line

Silver chart is messy, broader triangle building

The silver chart makes gold trading look clean. The unusually choppy trading conditions since February are rare to find when looking back historically. Something has to give, but until we see a discernable trend develop it’s a market reserved for only those who are looking to fade short-term price swings. If that is your thing, then you probably view the current environment favorably, but if you’re looking for a big trend, the sideline remains an attractive place to hang out.

Price action since early last year is generally working towards the apex of a triangle, which suggests a major move is coming. However, the apex of the wedge extends out a few months and thus could mean the poor trading could as well. But, we are close enough to the apex that a breakout could evolve at any time. However, for now, until we see a sustainable break it’s either range-fades or nothing at all.

Silver Daily Chart (Range, Broader Triangle)

Silver daily chart, choppy range within broader triangle

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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