Summary:
- Precious metals may correct recent rally
- Gold bounces off the key resistance from W1 interval
- Silver is trading below $17.25 handle
The price of gold bounces off the key technical resistance
Today's analysis will be focused on the precious metals market, let's see how the technical situation on gold and silver looks like. Looking at the gold market, the price has reached a key resistance zone. Supply reaction occurred in the vicinity of 61.8% Fibo level just as we have mentioned in the previous week.. In addition to the Fibo retracement, an upper limit of the upward channel can be found in the same area. These two obstacles combined with lows from previous years (marked with arrows), caused rally on the gold market to slow. A pullback back below the $1500 handle hints at a possible downward correction. The target for such a scenario could be around $1452 handle, where the lower limit of the local market geometry can be found. In case of a break lower, the downward movement can accelerate. Remember that the main trend on gold market is upward and if we see a break above the resistance zone at $1520, another upward impulse may start. This is why contrarian transactions are very risky. However, the place from where the price currently pulls back seems to be an ideal spot for the launch of a corrective move.
Source: xStation5
Temporary stop or bigger downward correction?
Taking a look at the lower H4 interval, one can see that the upward momentum has eased recently. This is due to the fact that investors turned towards more risky assets, such as shares, last week. However, to speak of a larger downward correction it would be necessary to see a break below the $1480 handle, which acts as a key support for now. This level is marked with the lower limit of the Overbalance system and the 38.2% Fibonacci retracement of the last upward movement (measured from the end of the first correction). If this support is broken, sellers will have an open way towards the next Fibo 61.8% - $1445. Otherwise, defending the $1480 handle could trigger next upward impulse.
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Source: xStation5
Silver bounces off the resistance zone at $17.25
The technical situation on the silver market is very similar to the one we can observe on the gold market. Following a bounce off the $17.25 handle, the price has a hard time breaking higher The price has been moving without a clear direction so far this week. Having said that, the zone around the $17.25 handle remains the key resistance. Only a break higher could open the way for a bigger upward impulse. On the other hand, an important support is localized around the $16.6 handle. As long as the silver price is above, the upward trend is valid. In case a break lower occurs, the decline may deepen to as low as $16.15 - the next significant support.
Source: xStation5
