Gold and Silver Outlook: Rising Trendlines Remain in Play

Gold and Silver Outlook: Rising Trendlines Remain in Play

Gold and silver have been bullish in 2015. Last week, these precious metals started to consolidate. However, this week’s price action in both suggests that they are still bullish.

Gold (XAU/USD) 1H Chart 1/28
gold 1h chart 1/28
(click to enlarge)

The 1H chart shows a market that has been consolidating but is now breaking above a falling channel. Price has also pushed above the 200-, 100-, and 50-hour simple moving averages (SMAs), reviving a bullish bias. The RSI has also broken above 60, showing loss of the prevailing beaish momentum in the 1H chart.

The 4H chart provides more evidence that gold is still bullish.

Gold (XAU/USD) 4H Chart 1/28
gold 4h chart 1/28
(click to enlarge)

We can see that the rising trendline from the 1168 low on the year remained in play, keeping the price action in gold bullish. The rally today essentially invalidated a possible double top. Also, with price holding above the SMAs, and the RSI holding above 40, the bullish bias and momentum in this time-frame was maintained.

FOMC Watch:
Now, if the FOMC projects caution and the prospect of delaying the rate hike until after mid-2015, gold will have a better chance breaking above 1307. In that scenario, the 1340-1345 July highs will be in sight.

Now, if price fails to clear 1307 and falls back below 1270, the bearish targets will be first limited to previous resistance pivots at 1255 and 1235-40.

Silver (XAG/USD) 1H Chart 1/28
silver 1h chart 1/28
(click to enlarge)

While the 1H Gold chart showed a bullish breakout, silver is still respecting last week’s consolidation action as a top. If price holds below 18.20, silver will remain bearish in the near-term, especially with the 1H RSI holdign below 60, showing maintenance of the bearish momentum in this time-frame.

A break above 18.20 then puts pressure on the 18.47-50 area, and a cautious FOMC would allow the bullish momentum to punch through. In this bullish continuation scenario, the next key level to watch for resistance will be at the 19.00 handle.

Silver (XAG/USD) 4H Chart 1/28
silver 4h chart 1/28
(click to enlarge)

Now, if the FOMC is holding its mid-2015 rate hike projection, silver might fall back to threaten the 17.47 pivot. A break below that would expose first the 16.50 area, then the 15.53 low on the year.

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