Gold & Silver; Biased Downtrend Channel

Gold is a lot weaker after a good corrective run higher but there are many other factors that can give the yellow metal some support. Pausing above the 50% retracement area could allow the gold bulls to build some solid base before another attempt higher. Given a weak dollar index, it should be able to resume higher but the thin market has not provided any follow through. Taking a position in the range of 1290 to 1320 remains risky and most traders are waiting for a breakout so as to provide a direction to trade in. However, the short term remains biased to the downside for now.

Should it break below 1273, it will trigger more stop loss and could easily take gold to retest support at $ 1265 area and only a break below $ 1240 will warrant a revisit of $ 1210 area. On the other hand, if it can break above $ 1350 convincingly – we would not be surprise to see higher gold prices due to more short covering.

Resistance: $ 1308, $ 1318, $ 1347
Support: $ 1273, $ 1264, $ 1244

Traders Notes: Buy the breakout at $ 1353 to target $ 1375 area or higher. Only short gold if it breaks below $ 1240 as downward resumption can continue to target $ 1210 and $ 1180 area again.

At the moment, silver prices continued to trade within a downtrend channel but the recent retest of low shows that buyers are determined and looking for higher prices. The support at $ 19.20 held twice now and should it break above the upper downtrend channel and managed to hold on to its gain, we could see resumption higher. The daily charts show a tightening Bollinger band that could imply an imminent breakout but which direction remains unclear.

We continue to see a persistent downtrend and fear that the rebound will be short lived. Any rallies must be sold at the moment unless it trade above $ 21.60 level to give the bull a chance to recover.

Resistance: $ 20.60, $ 21.00, $ 21.59
Support: $ 19.20, $ 19.00

Traders Notes: Buy on the breakout of $ 20.60 but with a stop loss at $ 20.10 target $ 21.20 and $ 22.00 area.