By Andrew Nyquist
Last week, both Gold and Silver bounced off major support lines and thus far the bounce has been strong. But bulls shouldn’t let their guard down, as the metals are still contained within a wedge formation.
Therefore, a stair-step technical approach may be prudent for those that want to get long for a trade, or investment. Here’s how each of the precious metals stacks up technically.
Gold prices have been giving metal heads heartburn in 2012. But the recent 65 dollar surge near support has many hopeful.
First and foremost, Gold must take out 1625, the scene of the May breakdown, lateral resistance, and the 4 month downtrend line. A strong move higher would open the door to the next stair-step at 1675.
If 1675 is converted, then comes the descending down trend line currently at 1720 and falling incrementally.
Again, this all hinges on Gold holding recent lows near 1545.
Over the past year, Silver prices have tested critical support near 25 dollars three times. This prompts a good question: Is three times really a charm? Well, additional technical support comes by way of the 4 year trend line, which resides just above 25 dollars – note Silver bounced off this trend line last week (see weekly chart).
On the daily chart, resistance comes in play at 28.65 and, if hurdled, June highs around 30.00 (which also happens to be near the descending downtrend line of a larger wedge pattern.
No position in any of the securities mentioned at the time of publication.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.