Technical Update - Gold and Silver indicates it is correction time. Gold/Silver ratio could follow
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Gold spot XAUUSD touched key support at 1,80 yesterday and formed a Bullish Engulfing candle. A Bullish Engulfing candle is when the price opened lower than previous day’s close and closed higher than previous day’s open.
A Bullish engulfing candle shows that Buyers taking control from Sellers and an indication of a bottom and reversal i.e. XAUUSD is set for a rebound. A rebound that could take Gold to around 1,780 and the falling trend line.
For XAUUSD to continue the down trend a close below 1,680 is needed.
Silver spot XAGUSD is finding support at 0.618 retracement and the key support at around 18.35. See weekly chart.
On daily chart three times have XAGUSD tested the support level and could be ready for a correction. If XAGUSD breaks above 18.45 it could bounce to the 0.382 retracement at 21.22. If XAGUSD takes out the support at 18.35 with a daily close XAGUSD
The Gold/Silver XAUXAG ratio is still in an uptrend weekly chart the price is hugging the upper trend line in a rising channel. (weekly chart)
A correction should be seen but XAUXAG must break below 89.55 for that scenario to unfold. XAUXAG is trading in a rising channel (or is it a wide rising wedge – not yet confirmed) and could test the lower rising trendline. That will be tested if XAUXAG breaks below 89.55.
If XAUXAG breaks below the trendline minor support at the 0.618 retracement at 86.90 but XAUXAG could drop to 85.00 or even to 82.25.
If instead XAUXAG moves higher above 92.20 we could see a new higher above 93.67.
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