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Silver and gold test important support levels

Jason Sen
Silver is yet to establish a bull trend, but this is my big tip for the rest of the year.
As you can see in the daily chart below, we have been in much of a sideways trend since November last year. A burst through the 100, 200 and 500-day moving averages at the end of August was promising for bulls. However, as we became overbought at the beginning of September profit-taking was triggered.
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We have now fallen back to test the blue and green 100 and 500-day moving averages. These coincide with important 38.2% Fibonacci support at $16.80. In fact we saw a bounce from exactly that point yesterday, just as we become oversold on the daily chart.
More importantly, we have dipped back to test the 100-week moving average and five-year trendline at around the same $16.80/$16.70 area.
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Therefore this support could not be more important. I think this is a golden opportunity for investors and it’s possible we may never see this price again. If this proves to be the best buying opportunity of the last seven years, as I believe it is, silver will rocket now from the support back up through the 200-week moving average at $17.30.
This will initially target the high for this month that $18.20 before the high so far this year at $18.64. But this should be just the start of the longer-term bull trend. A break above $19 would be another important buy signal as we break through the longer-term 23.6% Fibonacci resistance at $18.75.
Gold managed a good recovery this year, but could not quite test last year’s high of $1374, as we topped at $1357 this month. In fact it was the three-and-a-half-year trendline, at $1366 in the weekly chart below, that was the likely reason for profit-taking.
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There was good support at around $1300. But we will need to hold above the previous April/June high at $1295 if bulls are to remain in control of this nine-month trend. Although we dipped to almost $1287 yesterday, a weekly close tonight above $1300 would be encouraging.
The weekly moving averages offer some encouragement. There’s a bullish 100-week moving average crossover of the 200-week moving average. We are also holding above the green 500-week moving average support.
Having expected gold to hold above $1300, the dip below $1295 is of concern. But we are seeing something of a recovery this morning. Bulls must force a weekly close above the important $1300/$1305 area to feel confident for next week.
I would take a break above $1305 as a buy signal today targeting $1315 and then $1321/1322. These are only minor short-term obstacles and, once through here, the path is a lot clearer to $1330, $1342 and then a re-test of this year’s high at $1357.

Jason Sen

Technical Analyst & Trader
For more information, trading education and offers visit InterTrader
The content of this article is the personal opinion of the author and not InterTrader. You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is not investment advice. The information provided is believed to be accurate at the date the information is produced.

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