As has been the case often lately, the precious metals are positive in pre-US open. These have tended to be fleeting positive vibes, but we should keep the technical parameters in view nonetheless because a) you don’t want to buy (or at least hold) a sucker bounce and b) just maybe the forces of right and good ;-) will one day break out of this funk. So we should stay tuned up on what constitutes bull and bear in the precious metals.
At 1297 (8:17 US Eastern) gold is still within a Symmetrical Triangle and below both the 50 and 200 day moving averages. MACD and RSI have been creeping along with an upward bias. The bull case gets serious attention if gold breaks the top of the triangle currently a hair above 1300, and not until.
Silver is at 19.57 (8:20 US Eastern) and as you can see it is not far from the 50 day moving averages at 19.76 (EMA) and 19.83 (SMA). Best to let it prove itself as well before releasing the endorphins.
HUI is still within a support zone, which needs to hold to avoid a date with the 205 big picture parameter. It has formed a little bullish wedge from which it may try to bounce (we had noted the current support as a potential bounce point). Players may even try playing a bounce. But be aware of the converged SMA’s 50 and 200 right at 227 (and dropping).
Bottom Line
A bounce may play out here but I have tried to illustrate clearly and simply the parameters that would make it more than just a bounce. One of these days I think the reversal and upside in the precious could be something to behold. We should use charts however, to make sure we are aware of those other days as well. The above shows us where ‘bounce’ turns to something more.
