Last Monday, we also wrote about gold. On that day we were bearish. The previous piece ended with this:
“The sell signal is on as long as we stay below the green line. Do not forget that on gold, we are very close to the long-term upwards trend line (10 years). A breakout of such an important support could have catastrophic consequences."
Today, we will continue with our negative outlook, but we will switch to gold's younger and smaller sibling – silver, where the price is having a strong sell signal as we speak. The last few days here have actually not been that bad. The price was climbing higher, but it all eventually ended with a head and shoulders pattern (blue rectangles), which is a very negative sign for buyers. The neckline (black) of the H&S was already broken, but the most important support here is the yellow area below 14.5 USD/oz. If the price closes the day below the yellow area it will be a trigger to go short.
The sell signal will be denied when the price comes back above the neckline, which as for now, is less likely to happen.