Last Monday, we wrote about Gold. Back in 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 the younger and smaller brother of Gold – Silver, where the price is having a strong sell signal as we speak. Last few days here were actually not 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 the 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. Price closing a day below the yellow area will be a trigger to go short.
The sell signal will be denied, when the price will come back above the neckline, which as for now, is less likely to happen.