first majestic silver

Gold Rally Ending…BUT Maybe Not For Long

March 26, 2016

Well, it looks like I sort of called it last week.  Now, where are we this week…and more importantly, where are we headed?

As this week’s chart shows, it’s basically been a bummer last week.  One day up but the rest down.  This has caused the technical picture to weaken further from that presented last week. 

Sticking to the strictly simple ----

On the short-term the moving average has moved sharply lower, below its previous low of last week in sympathy with the new low in the gold price.  The price itself is breaking short-term support for a not so bright signal.  Not shown but the short-term RSI has been showing a significantly more weakness than the intermediate-term RSI, since reaching its high in the second week of February.  At the present, the short term RSI has already entered its negative zone. Definitely very, very risky to be thinking of jumping in on the buy side.  I would rate the present short-term position of the gold price as NEG.

Now getting to the intermediate-term, unfortunately the picture hasn’t changed much.  We still have the short-term moving average line above the intermediate term average.  We therefore do not have an intermediate-term bear signal.  However, the short term average is plunging and moving fast towards the intermediate term average and threatening to cross below the intermediate average very soon.  The intermediate term RSI continues to show weakness in the strength of the price movement and in fact has fallen below its support line shown as a thin black line parallel to the upper resistance line.  Since the RSI is somewhat of a volatile indicator I use a trigger line moving average to gauge better what the message of the RSI really is.  Here we see that the trigger line had turned downward a couple of weeks back.  There are times when I find the direction of the trigger line (i.e. is it pointing upward or downward) very, very important and could at times act on its direction along with the trend indicator. 

As warned last week the flag or pennant pattern has been broken on the down side.  The action seems to have hit a support at the intermediate term moving average line but that is suspect for now.  There is support at the $1190 level but should that fail look out below.  My short to intermediate-term point and figure chart has an unconfirmed projection for this move back to the $1100 level.  However, should the move actually breach that $1190 support the Point & Figure chart would then project to the $920 level for new lows.  As a note I had a $900 projection for Gold from action back in 2012, which is still valid so that $920, if confirmed, looks like it just might come to fruition.

At the present time my rating system gives me an intermediate term rating of POS, at the close on Thursday.  It would, however, take very little extra negating price action to downgrade this rating.

My 100 gold and silver stocks in the Merv’s Gold and Silver 100 Index are continuing to weaken with each week.  The short-term Bullish/Bearish rating for these 100 stocks has now moved into the negative side with only 31% bullish and 55% bearish.  The intermediate and long-term 100 stock ratings are still very bullish but getting weaker.

The best scenario to hope for would be for the price to hold above that $1190 support -- and the RSI remaining in its positive zone.  Then we might go back into a positive rally mode.

New readers to these commentaries might notice that I use time moving averages and indicators that are not common.


Readers are invited to view my Facebook page at where I will be slowly posting commentaries explaining in more detail my various indicators and techniques. I also present from time to time some individual stocks that look as if they may be good speculations.  However, nothing I post is meant to be a recommendation to buy or sell.  One should check with their broker or investment advisor before acting.

Merv is a retired Aerospace Engineering consultant.  He is also a retired market technician with over 40 years of market experience and research.  Merv received his certification as a Chartered Market Technician (CMT) in 1992. Developer of many technical techniques and programs which he has been using in his previous Technically Speaking with Wil-Arm and Technically Precious with Merv commentaries posted throughout the globe.  Developer of several gold and silver Indices, Merv continues to update his Merv’s Gold & Silver 100 Index and Merv’s Penny Arcade 50 Index and reviews them during his periodic on-going Technically Precious commentaries. 

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