Gold Price and Silver Technical Outlook Post-FOMC Turns Negative
Gold Price/Silver Technical Outlook:
- Gold price on the verge of reversing recent triangle breakout
- Silver no longer acting well, turning hard off 2003 trend-line
For an intermediate-term fundamental and technical viewpoint, see the Q3 Gold Forecast.
Gold price on the verge of reversing recent triangle breakout
Yesterday, the FOMC cut rates by 25-bps as expected, but the market clearly wanted more of a boost to keep on buying precious metals. The Dollar has so far responded by breaking out to 2+ year highs. The turn lower in gold has the recent wedge breakout under siege.
A reversal of a bullish pattern breakout can turn into heavy selling as market participants who accumulated during the congestion phase (building of the wedge) find themselves at a loss. A break of the underside trend-line of the wedge will be the cue that lower prices could come quickly.
In the event of a breach (looking quite likely given price is at the bottom-side t-line) the first level of support is the wedge bottom at 1381, followed by 1375 down to the 1340s where the long-term wedge breakout first started. In regard to the macro-wedge on the weekly chart, a down-move can still unfold with the bigger picture bullish outlook remaining intact, as long as gold doesn’t sink back inside the wedge.
Gold Price 4-hr Chart (on verge of reversing wedge)
Gold Price Weekly Chart (long-term breakout may see a retest)
Silver no longer acting well, turning hard off 2003 trend-line
Silver was hanging out at the underside of the 2003 trend-line that capped price in the beginning of the year, but that is quickly changing. If gold reverses the wedge with force look for silver to continue to sell-off as well, taking away the possibility of seeing a consolidation pattern form at the long-term trend-line. More selling may bring into play the 15.50s soon, where a trend-line from the May low arrives along with horizontal support from March and June.
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.
Silver Price Daily Chart (selling off from 2003 t-line)
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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.