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Gold & Silver Prices Moving Closer to Triggering Technical Patterns

Gold & Silver Prices Moving Closer to Triggering Technical Patterns

2019-04-12 11:00:00
Paul Robinson, Currency Strategist
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Gold/Silver Technical Highlights:

  • Gold drop from t-line, descending wedge nearing completion
  • Silver is moving near neckline, support test (break soon?)

See what fundamental drivers and technical signposts our team of analysts are watching in the DailyFX Q2 Gold Forecast.

Gold drop from t-line, descending wedge nearing completion

The other day it was noted that gold was supported in the near-term after reversing from support levels, with the trend-line off the Feb high initially targeted. With Wednesday’s touch of resistance and yesterday’s drop from it, a descending wedge is becoming increasingly clear.

The pattern is often regarded as bearish given the increasingly lower highs indicating sellers coming in more aggressively each step of the way. With that said, though, these patterns can still turn out to be bullish. But here is why it is more probable gold is headed lower.

Pulling back to the bigger picture, gold remains stuck in a multi-year wedge. It most recently came off the top of the broad formation, leaving plenty of room to the downside (~1215/25). To trigger the descending wedge a drop below 1281 is needed, and to further along momentum a decline below the August trend-line.

On the top-side, a close above the upper t-line of the wedge and 1310 is required to gain more buying interest. Should this lesser likely scenario come to fruition, the top of the long-term wedge (2014 t-line) will be targeted in the 1340s.

A breakout could happen in a day, it could take a week or longer, so it won’t be much more time before gold gets rolling again with directional clarity. Likely lower…

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 (descending wedge)

Gold daily chart, descending wedge

Gold Weekly Chart (Inside broader wedge formation)

Gold weekly chart, inside broader wedge formation

Silver is moving near neckline, support test (break soon?)

Silver is sporting a bearish price pattern of its own, one discussed frequently as of late. The head-and-shoulders pattern is near the neckline, which is in approximate confluence with the top of a range from last year. A decline below 14.70 will have prices cleared to move towards 14.

Alternately, the entire price sequence since the beginning of the year could be a falling wedge with a bullish outcome. A breakout above the trend-line off the Feb high and 15.34 is needed to give this scenario legs.

Silver Daily Chart (H&S nearing neckline)

silver daily chart, H&S nearing neckline

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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