Technical Analyst, Saxo Bank Group
Summary: Gold and Silver have formed top and reversal patterns. A correction seems likely to unfold over next few days
Gold ripe for a correction. Gold has formed a Bearish Engulfing top and reversal candle. Gold future shows identical pattern.
With the divergence on RSI (RSI is declining when asset price has been rising) the precious metal is ripe for a correction.
A correction should take Gold down to the 0.382 retracement at 19,55 but could drop to the 0.618 retracement at 1,897. However, 55 and 100 daily Moving Averages are coming up around that level providing some support.
Minor support at around 1,981. If taken out a short-term down trend has been confirmed.
If Gold can stay above the bottom of the Cloud bull trend is likely to resume after a correction.
For Gold to reverse this bearish correction scenario a close above the 2,050 is needed.
Gold has run out of steam short of all-time high and with divergence on Weekly RSI a correction should be expected.
Silver has also formed Bearish Engulfing candle indicating a top and reversal. Contrary to Gold there is no divergence on RSI suggesting Silver is likely to resume uptrend after a minor correction.
Nevertheless, a correction can take Silver down to the 0.382 retracement at around 23.70. If closing below Silver could dip to test 23.00 where the 100 and 55 daily Moving Averages are coming up providing support. However, a dip down to strong support at around 22.25 should not be ruled out.
To demolish and reverse this bearish correction scenario a close above 23.10 is needed.
Weekly chart Silver was rejected at the strong resistance area 25.85-26.46. Medium-term trend is still up but a correction is likely. Strong support at around 22.25 which is both the 0.618 retracement and the top of the Cloud.
Gold/Silver ratio is bouncing from support at around 79.00 after dipping down to the 0.786 retracement at 78.36 forming a bottom and reversal pattern.
A rebound should have energy to take Gold/Silver to the 0.382 retracement at 83.50 but a move up to 85 level where the 200 and 55 Moving Averages are providing resistance.
A new fragmented world order can render some of today's infrastructure obselete, but it also calls for massive new investments across the globe, which requires a new set of strategic and tactical investment strategies.
Steen Jakobsen,
Chief Investment Officer
As globalisation turns to fragmentation, China seems set on playing a role in the global economy, while simultaneously working towards proofing its own economic situation from external shocks and crises.
Redmond Wong,
Market Strategist
The recent bank runs and ensuing challenges are reminicent of something we've seen before. Will it end like the S&L crises of 1986 and 1995?
Chris Dembik,
Head of Macroeconomic Research
Equity markets need to recalibrate to another - fragmented - global world. What's your view on equities in this market - are they going up or down?
Peter Garnry,
Head of Equity Strategy
With every development comes new opportunites, some of which could be in India. Have you considered the country as a part of your diversification strategy?
Charu Chanana,
Market Strategist
A collar is an option strategy that allows some protection while maintaining some upside potential. What investment would you like to use a collar strategy for?
Hans Oudshoorn,
Trainer Academy
There are arguments to be made for many commodities to have upside. Which are you paying the most attention to this quarter?
Ole S. Hansen,
Head of Commodity Strategy
In a very challenging macro environment, which currencies do you think will come out on top?
John J. Hardy,
Head of FX Strategy
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research 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. To the extent that any content is construed as investment research, you must note and accept that the 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 under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)