Gold Uncoiling, Silver Testing Support

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Gold Uncoiling, Silver Testing Support

Gold and Silver prices are consolidating. As we get ready for the 9/30 session, there are some bearish signs, but will they stick?

Gold (XAU/USD) 1H Chart 9/30
gold 1h chart 9/30

(click to enlarge)

Since last Thursday (9/25), gold has been coiling. The 1H chart shows a triangle pattern as price crossed up and down the 200-, 100-, and 50-hour simple moving averages (SMAs). This shows a directionless market. However, as we get ready for the 9/30 session, price is uncoiling downwards, moving south of the SMAs and breaking below a rising trendline from Thursday’s (9/25) low of 1206.94, which is the low on the month so far.

Gold (XAU/USD) 4H Chart 9/30
gold 4h chart 9/30

(click to enlarge)

The 4H chart shows a bearish bias. The 4H RSI has held below 60, so the bearish momentum is maintained. Price is now back below the 50-period SMA. It looks like price is poised to test the 1207 low. A break below that opens up the 1200 handle as well as the 2013-2014 lows just above 1180.

A break above 1220 might suggest that gold is still in consolidation, but a break above 1235 will be needed to consider a possible price bottom and a possible bullish correction.

Silver (XAG/USD) 4H Chart 9/30
silver 4h chart 9/30

(click to enlarge)

When we look at the 4H silver chart, we can see that it is also consolidating. Just like gold, or maybe more so than gold, the moving averages and the RSI reading shows a bearish market. Looking at the current consolidation range between 17.34 – 17.98, we can see that price is now consolidating in the bottom half, and also heading toward the lows around 17.34.

Now, a break below 17.30 can open up the the 17.00-17.05 area, which represents common lows in April through August of 2010. Below 17.00, the next key support will be the 2010 low of 14.63.

If price pushes above 17.75, price would be focused on the 18.00 handle. A break above that then introduces a price bottom, and a bullish correction scenario.

Silver (XAG/USD) Weekly chart 9/30
silver weekly chart 9/30

(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.