Gold has been consolidating in a descending triangle this week after it found resistance at about 1322. Note the bullish bias in the 1H chart.
1) Price was bullish at the end of last week, so the prevailing trend in the 1H chart is bullish before it consolidated this week.
2) Price is for the most part trying to stay above the 200-, 100-, and 50-hour simple moving averages, which would reflect a bullish market.
3) Price broke above the descending triangle resistance today.
However, you can see that as we get into the 8/15 Asian session, price is falling below back into the 100-, and 50-hour SMA area. Gold has retreated back into the previous triangle. It is also breaking below a 2-day rising trendline seen in the 1H chart.
(click to enlarge)
Silver has entered a period of consolidation as well. It has been mostly sideways with the 19.73 area as support, and 20.17 area as resistance. There is a divergence between gold and silver. You can see that gold is consolidating after a bullish swing because the moving averages were upward sloping in the 1H chart. The moving averages in silver’s 1h charts, are downsloping.
For silver, a break above 20.00 will be needed to put away some bearish bias in the short-term, and a break above 2.20 would put in a price bottom for a bullish outlook.
However, if silver price falls below 19.70, it opens up the 2014 low in the 18.64-18.70 area.
(click to enlarge)
Gold – Silver Correlation: There is a correlation between silver and gold, but it can diverge like this in the short-term. And it is really, within a larger picture of a sideways market in 2014, which describes both gold and silver. Still, when both start moving in the same direction, traders might have more confidence in extending the trend, at least more than if gold breaks one way while silver breaks another.
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