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Technical Update - Copper, Gold, Silver & Gold/Silver ratio
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: Copper seems to be forming a corrective pattern. Key support at 394.
Gold still holding on above key level at 1,800. Could reverse from here
Silver sell-off seems to be exhausting . Correction possible
Gold/Silver ratio still on the rise but testing resistance level. Short-term correction could be seen
Copper 394 support seems to be too strong for Bears to break. Copper could be forming a Descending triangle like pattern that could be corrective i.e., if closing above falling trendline correction is likely to be over and new highs should be expected.
But, it could also be trading in a falling channel (indicated by the falling blue trendline) but here is the support at 394 key.
A close below 394 could fuel a sell-off down to strong support at around 370.
A close below 394 will also break the medium-term rising channel (weekly chart) and push Copper back below the 55 weekly Moving average.
If Copper breaks above the short-term falling trendline in what could be a Descending triangle uptrend is likely to resume to test January peak around 435 but quite possibly moving higher to around 457-463
Weekly RSI is positive without divergence suggesting higher Copper prices.
Gold still holding up above 1,800 fluctuating around the 0.618 retracement at 1,813. A break below 1,800 could fuel a sell-off down to support at around 1,768 possibly down to 1,732.
Weekly chart shows why 1,800 is key. 1,800 could be key pivot level for Bullish/Bearish trend.
Weekly RSI is positive without divergence suggesting Gold will resume uptrend but if 1,800 is taken out Gold could re-visit the 200 weekly Moving average which is rising and will provide some support. A close above 1,865 and the 55 daily Moving average is needed for Gold to resume uptrend.
An uptrend that is likely to take Gold back to 1,950-2,000 area. 100 and 200 daily Moving averages provide some support and very short-term Gold could be range bound between 55 and 100 daily Moving Averages.
Daily RSI in negative sentiment and with no divergence adds to the rather blurry/range bound picture.
Silver After reaching its Inverted Shoulder-Head-Shoulder potential Silver has totally collapsed taking it back below the Neckline (See weekly chart). Weekly RSI is currently testing 40 threshold and if closing below there is further downside for Silver.
The collapse has formed a short-term falling wedge like pattern with RSI divergence indicating the sell-off is exhausting. A close above the upper falling trend line will confirm that and a close above 21.30 will reverse the trend with strong resistance at around 22.04. 100 and 55 daily Moving averages will add to the resistance around 22.
If Silver closes below 19,90 the down trend is likely to be extended. But keep an eye on the RSI, if it cancels the divergence i.e., closes below 24.00 from the 27th February. If that scenario plays out there is down side potential to around 19.
Gold/Silver XAUXAG ratio is testing October peak at around 90.69. There is no RSI divergence however, indicating higher levels. A move to 0.786 retracement at 91.80 is likely but there is no strong resistance – if Gold/Silver closes above 90.68 before 96.50.
For Gold/Silver to reverse trend a close below the lower rising trend line and below the 86.60 is needed.
Weekly chart RSI is positive indicating higher levels. 96-96.50 seems likely to be reached
For Gold/Silver to reverse trend a close below the lower rising trend line and below the 86.60 is needed.
Weekly chart RSI is positive indicating higher levels. 96-96.50 seems likely to be reached
RSI divergence explained: When instrument 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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