Gold & Silver Snap Trends – Correction Confirmed

From $18 to $31 in 4 months – that’s the extent of silver’s recent run and it effectively ended today. Gold went from $1155 to $1430 in the same time frame and also saw the end of that run today. This correction may be well overdue and the extent is unclear, but it is certain that precious metals are officially retracing.

Gold closed below the 50 Day MA as short term support lies at $1315 and long term support at $1262. Before, I suggested that gold may correct soon and that $1262 was the support, we’ll see if that in fact plays out. Coincidentally, $1262 is exactly where the 200 Day MA is resting at, but gold will first have to test $1315. The deeper it corrects, the harder it will rebound.

Silver closed below it’s 20 Day MA which confirms that the August trend is broken. From the bullish side, there is a top trendline that began two days ago with the top at $31.21. If this trendline holds, it may form into a falling wedge pattern at the bottom so that will be something to keep an eye on. Next support levels are at about $25 and $18.80. I don’t expect silver to even come close to $18 but it’s on the table as the next lowest support. Something I’d like to see happen in silver is the MACD, RSI, and Slow stochastics come down to the oversold level. They haven’t been there since the rally began and if they make it all the way there it still may not mean the correction is over, but it will certainly serve as a healthy sign that the trade is not too crowded.

There is one more support trend on this chart other than the closing prices of $25 and $18.80 – the 50 Day MA is also on the table and I expect a bounce to occur off of it once silver enters oversold range on the oscillators however I do not know if that will be the extent of the correction. Prepare to hear about how the commodities bubble has burst on CNBC and other websites, and then use this as an opportunity to accumulate.

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About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

2 Responses to Gold & Silver Snap Trends – Correction Confirmed

  1. Pingback: Tweets that mention Gold & Silver Snap Trends – Correction Confirmed « Aaron Basile -- Topsy.com

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