Technical Update - Correction in metals seems to be over. Gold, Silver and Copper likely to resume uptrend
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Correction in metals seems to be over. Uptrend likely to resume
Gold looks set to test 200 SMA and key level at 1,808
Silver eyeing 22.30 possibly 23.35
Copper could test 400 but higher levels around 425 could be seen
Gold XAUUSD spiked below the 1,735 support level but bounced quickly from the 0.382 Fibonacci retracement at 1,722. RSI is still bullish without divergence indicating higher levels are likely.
Gold could test the key resistance at 1,808. If Gold close above 1,808 it has reversed the medium-term down trend. See weekly chart
If Gold slides back lower and breaks below 1,720 it is likely to drop to the 0.618 retracement at around 1,680 which is also the previous Bull/Bear pivot now key support.
Silver XAGUSD bounced from the 0.382 retracement at around 20.65 and the 200 daily SMA. Now hovering around the resistance/support level at 21.25. Trend is up supported by positive RSI sentiment and key resistance at around 22.30 is likely to be tested. A break above could fuel further rally to 0.618 retracement at 23.35.
However, if Silver slides back below 20.57 it could drop to the 0.618 retracement at around 19.67.
Copper seems to be bouncing from the 0.618 retracement around 355 and could be set for picking up the bullish trend.
RSI still showing positive sentiment is bouncing from its rising trendline. No divergence indicates higher levels above 396 is likely. Potential target would be 421-427
If Copper fails to resume uptrend and instead closes below 354 a sell-off back to around 330 is in the cards.
RSI divergence: When price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
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