Gold and Silver Approaching Triangle Lows after FOMC

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Gold and Silver Approaching Triangle Lows after FOMC

Gold


Gold price (XAU/USD) continued its recent decline after the FOMC statement and press conference.
The 4H chart shows a consolidation pattern that formed in the few sessions leading to the FOMC risk. Price eventually held below 1240 and is now trying to push below 1220.

Gold (XAU/USD) 4H Chart 9/18
gold 4h chart fomc

(click to enlarge)

The 4H chart has all the bearish signs.
1) The 200-, 100-, and 50-period simple moving averages (SMAs) are sloping down, in bearish alignment, and spreading apart, while price is under all of them.
2) The RSI is holding below 60 and tagging below 20, showing persistent bearish momentum.

It could be noteworthy that the 1240 level acting as resistance this week was a key support pivot in June. This is an additional clue for the bearish outlook.

When we look at the weekly chart, we can see that price is approaching the 2013 and 2014 lows just above the 1180 handle. This is the support area of a triangle that has been developing for over a year now. We can expect price to fall until this 1180-1200 area before finding support.

Gold (XAU/USD) Weekly Chart
gold weekly chart 9/18

(click to enlarge)

Silver

Silver had similar price action before and after the FOMC risk. The 4H chart shows that XAG/USD was consolidating in a flag consolidation pattern, which was broken after the FOMC statement and presser. The bearish trend in the 4H chart is intact and has the technical conditions listed above for the 4H Gold chart.

Silver 4H Chart 9/18
silver 4h chart 9/18

(click to enlarge)

However, unlike gold which made a new low and has room toward a year-long triangle pattern support, silver is finding support around 18.46. There is only little room for silver before it tags its triangle support seen in the weekly chart. In fact, we should say that silver is already at the triangle support area, which has a pivot as low as 18.20.

Silver (XAG/USD) Weekly Chart
silver 9/18 weekly chart

(click to enlarge)

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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.