Gold
Price is still above the 61.8% Fibonacci retracement line on the monthly charts at the $1155 level.
Gold - Classic Chart
The bulls have scored $25 from the close of the week ending on March 13, 2015 and that sent Gold above the short term downtrend beyond $1180 (highlighted in red on the chart above), which started in January when the metal hit $1300.
Previously, as seen in the above daily chart, Gold has sculpted the famous double bottom reversal pattern, highlighted in two blue circles. Indeed, price reversed up from a $1142 low to current higher levels, but the target at $1200 is still yet to be reached. The target is not far above, but Friday closed off the high and there is another hurdle on the way up at the $1900 level (previous low highlighted in red horizontal line). Price is currently squeezed within the $1170 (end of December low) and $1190 (February low) range. 1.7% between borders is not much for Gold to move and we will see a breakout soon. As Gold is right at the middle between barriers, the best tactic for now is to wait for either side to break out. Above $1190, the next important level is $1223 (previous peak) and bulls can gain $33 on the breakup. Below $1170, we can see again the November low at $1131 and bears can score $39. Both side players have almost similar profit opportunities.
Gold - Elliott Wave Chart
As seen on the daily chart above, Gold has finished a 5-wave basic sequence and now is in the a-b-c correction phase. Current wave “a” is not finished yet. It can reach the inner wave (i) of the wave 5 between $1195 and $1223 (highlighted in dotted rectangle). The train started off for wave “a” and it is risky now to jump in, so better to wait until the current wave is finished. When the wave “a” will be done, we can see the corrective wave “b” which is usually equal to wave 2. I will update tactics for you next week with price development.
Both the classic trend line chart and Elliot Wave chart give the same advice: wait and see. One important thing to note, once Gold finishes its current a-b-c correction, we can see a further move down as the 5-wave basic sequence was completed as wave (1) of the larger degree sequence.
Silver
This grey metal is fluctuating inside of the sideways pattern depicted in my previous post.
Silver has been showing a vigorous move on the daily chart above compared to Gold. The metal gained an impressive 10.3% from its March low, compared to a laughable 3.5% by Gold. The bulls enjoyed the total completion of a double bottom reversal pattern (highlighted in two blue circles). Price reached the target which is the left peak of the leg at the $16.88 level. And just ¢1 below this level is the 50% Fibonacci retracement line (highlighted in red dashed line). It makes this area very important, as on one hand, the price impulse is exhausted on the fulfillment of the double bottom pattern and on the other hand, silver bulls are halfway to the peak taking bears off the bottom.
Currently, the price hovers around the 50% Fibonacci level and for further direction we should watch for silver to close above this level. If it does, then you can try to buy the metal with your target at the $18.46 peak level. And vice versa if the price in coming days does not close above the $16.87 level, then you can opt to sell it with your target at $15.5-15.7, the downtrend support area. In both cases, you should put tight stops: below $16.87 when buying and above it when selling.
Lucky and Intelligent Trades!
Aibek Burabayev
INO.com Contributor, Metals
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
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