Gold and silver got bombed last night and have been recovering ever since. Here is the status of what are thus far Hammer candles.
Gold broke down into the downtrend channel and is now trying to claw its way out after hitting the next support level.
The weekly chart shows that support as defined by the Q1 2020 highs and subsequent lows tested that spring and summer. That is solid support. Gold has also tested the previous 2021 lows, thus far successfully.
Silver dropped and hammered as well. 21.23 is the level I’ve been looking for if the March low were to be taken out.
The weekly chart shows that long held objective, which was the 2016 high. The price got near 22 before the snap back.
Bottom Line
Overnight action feels like an event. But can it really be a capitulation event without participation from western markets? I don’t know the answer to that. But it did have the feel of a signal, at least for the short-term. That signal could be that the correction is over or at least that this phase of the correction is over prior to a real bounce (unlike the lame thing we’d been managing). Watch to see if the Hammers hold.
I’d like to see a real event, the kind that hits us right in the gut and jerks us to attention. That would be a capitulation. Again, I am not sure what last night was but if the Hammers stay intact the traditional technical implication would be for a temporary price recovery at least.
