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Gold/Silver Technical Highlights

  • Gold price action smacks of a ‘corrective grind’
  • Silver building a complex head-and-shoulders pattern

DailyFX has created a library of guides to help traders of all levels navigate markets, check them out today on the Trading Guides page.

Gold price action smacks of a ‘corrective grind’

Recent price action in gold has been a bit of a grind, and while it has yet to lead to a trade set-up that could soon change. The down-move starting last month left the precious metal vulnerable and with price struggling to gain traction another leg lower could be in the works in the not-too-distant future.

The 1300/11 area is a fitting spot for gold to struggle with both price and slope resistance in the vicinity. It’s not all that clean, but near-term price action is taking on the outline of a rising channel. A breakdown below the March 14 low at 1293 should have the path of least resistance in favor of shorts again.

A break would quickly bring the 1281/77-area into focus, which is also around the neckline of a head-and-shoulders pattern. It’s not the prettiest pattern, but sometimes it’s those which don’t look the best that work the best. A break below the neckline will bring into play trend support from August.

An update will be provided long before then, so for now just worrying about the next step which is to look for a rollover beneath the near-term swing-low at 1293, then the neckline. To negate a bearish bias a convincing rally needs to grow legs to above 1320 or so…

Check out the IG Client Sentiment page to see how changes in trader positioning can help signal the next price move in gold and other major markets and currencies.

Gold Daily Chart (Poised to roll over soon…)

Gold daily chart, poised to roll over soon...

Silver building a complex head-and-shoulders pattern

Silver is working on a similar pattern as gold, but with a bit more complexity. It will need to roll down past the recent low at 14.98 and to the neckline along with support from last year carved out during a range. To get silver safely in the clear for shorts, a drop below 14.70 needs to develop. Because of thick support and recently more resilient price action in silver, gold has become the preferred short.

Silver Daily Chart (H&S pattern gaining clarity)

Silver daily chart, H&S pattern gaining clarity

Resources for Forex & CFD Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at@PaulRobinsonFX