Gold and Silver in Double Bottom Attempts

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Gold and Silver in Double Bottom Attempts

Gold and Silver prices have been falling since late January. They both started the week falling further, but is entering the 2/25 session with double bottom attempts. Let’s take a look at the intra-day charts.

Gold (XAU/USD) 1H Chart 2/25
gold 1h chart 2/25
(click to enlarge)

The 1H gold chart shows that price continued to fall to about 1188 this week, but during the 2/24 session, traders supported gold again around this support. We can call this a double bottom attempt as price tries to break the double bottom neckline near 1210. Essentially, we are seeing a shift from a downtrend in the short-term to a sideways one. Now, if price can start holding above 1200, we can have a stronger conviction anticipating a bullish correction against the trend seen in the 1H chart. This scenario would need price to push above 1215 and the 200-hour SMA. We should also see the 1H RSI push above 70 before considering the bullish outlook. The very short-term resistance levels will be 1223 and 1236. Let’s not get ahead of ourselves yet and limit teh short-term bullish outlook here, but understand that there is further upside risk towards the 1300 handle, if we continue to see price respect today’s double bottom.

Silver (XAG/USD) 1H Chart 2/25
silver 1h chart 2/25
(click to enlarge)

Silver price action is in a similar situation – bearish since late January. It has completed a double bottom at the beginning of the 2/25 Asian session. Note that price has pushed above the 200-, 100-, and 50-hour SMAs, and the RSI has tagged 70. These are the signs we were looking for in the gold 1H chart, and we have them here in the silver 1H chart. Now, if price can hold above 16.40, the upside risk will be stronger and has the 17.40 level in sight in the short-term. Let’s limit the bullish outlook to this level first, before considering further upside towards the high on the year around 18.45

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.