Technical Update - Top formations in Gold and Silver. How low will they go? Bottom and reversal indications for Gold/Silver ratio Technical Update - Top formations in Gold and Silver. How low will they go? Bottom and reversal indications for Gold/Silver ratio Technical Update - Top formations in Gold and Silver. How low will they go? Bottom and reversal indications for Gold/Silver ratio

Technical Update - Top formations in Gold and Silver. How low will they go? Bottom and reversal indications for Gold/Silver ratio

Commodities 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

  • Double top patterns confirmed for Gold and Silver but downside could be limited
  • Bottom and reversal pattern close to being confirmed in the Gold/Silver ratio

Gold XAUUSD was rejected at the minor resistance at around 2,384. That level is the 0.382 retracement of the early May uptrend (red lines).

Gold sold off down below key support at around 2,314, establishing a downtrend (lower lows and lower highs). However, the RSI is still showing positive sentiment and is required to close below the 40 threshold to switch to negative sentiment.

If Gold closes below support at around 2,277 and RSI closes below 40, there is likely further downside for gold.

In case that bearish scenario plays out—where Gold is closing below 2,277—a double top-like pattern has been confirmed.
It is not the most perfect pattern, however, which can degrade the performance potential, suggesting a bearish move is likely to be limited to around the 2,222–2,195 support area.

In that area, the 1.382 projection of the double top at 2,211 lies. The rising 100 daily moving average will add to the support strength in that region. For Gold to resume its bullish trend, a daily close above 2,388 is required

Source all charts and data: Saxo Group

Silver XAGUSD formed a double top-like pattern in May, but with the strong bounce in early June, it seemed like it was cancelling it.

However, with the sellers taking back control the past few days, the double top scenario seems to be playing out. Short-term bearish trend is established, but RSI has not yet confirmed with a close below the 40 threshold.

However, Silver could still very well sell off down to the 0.618 retracement at 28.50, the same level as the 1.382 projection of last week’s bounce (red Fibonacci levels). The rising 55 daily moving average will give some support around that lev

If the strength indicator RSI closes below 40, there is likely further downside potential for Silver to 27.75–27.40.

For Silver to resume uptrend, a daily close above 31.55 is required. That scenario should not be ruled out completely as the RSI is still showing positive sentiment with no divergence, indicating a new peak above 32.52 is still in the cards

The Gold/Silver XAUXAG ratio seems to be forming an inverted Shoulder-Head-Shoulder bottom and reversal pattern.
A daily close above 79.20 will confirm the reversal pattern and is likely to fuel a rally to at least the 1.382 projection at 81.66 with upside potential to 1.618, or even to the 1.764 projection at 83.20 and 84.15 respectively.

A close below the right shoulder at 75.60 will demolish the pattern and XAUXAG will resume its downtrend.

RSI is still showing negative sentiment but also divergence, suggesting the downtrend has exhausted and Gold/Silver is likely to rebound higher.
An RSI close above 60 will further confirm a bullish move for the ratio

Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.