Monitoring Gold and Silver’s Initial Reactions to Osama Bin Laden’s Death

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Simple Moving Average ( SMA ) 200-period (bold, gray)
RSI-14 with Simple Moving Average 5-period of RSI attached.
Fibonacci Study
Elliott Wave Principles
Market and Price Action (patterns, candlesticks)
Intraday pivots and Intermediate-term support and resistance
Multiple Time-frame Analysis

Osama Bin Laden's apparent death and other factors may have helped flows out of gold and silver. Both started the week with a gap, sliding sharply. Silver however seems to be falling harder. Let's take a look at these precious metals.

Gold (XAU/USD)
Gold 5/2/2011 Charts
Short Term
- Gold is sliding but the momentum, reflected by the RSI in both 4H and 1H charts, is still bullish.
- In fact the 4H RSI is still above 70. The 1H RSI is still above 50, and shows a positive reversal (this RSI low is lower, but the corresponding price low is higher).
- Still, the market needs to close up the gap, and break above 1569 to signal a bullish continuation . 1585 is the next swing projection target for gold.
- The current low at 1548 holds the decline from going to 1518-1520 area, near 61.8% retracement. If this support breaks, gold can slide towards 1495-1500 .

Silver (XAG/USD)
Silver 5/2/2011 Charts
Short Term
- On Friday, silver was heading back to retest the 49.50 pivot, attempting to break above the 50.00 barrier. However, the market did not, and started this weak with a sharp gap down to 44.00 area.
- As we monitor the reaction, there are 2 important pivots. The 47.22 pivot is important. A break above that suggests a retest of 49.50/50.00 and a bullish continuation . A break above the 50 level targets 54.80-55.00 .
- However, if the market fails to close the gap, and instead breaks below 43.50 , it opens up the 4 1 .70-42.15 area, then the 39.70 pivot.
- It should be noted that while the 4H and 1H RSI reading in gold are above 40, the readings in silver for both time-frames fell way below 30. A sign that silver has more bearish momentum than gold and may see more pressure if the market shifts demand for precious metals.

Will Silver pullback from its rally more significantly than Gold? We would love to hear from you. S ubscribe and become a membe r to share your views and join live discussions as well as webinars about the markets.

Fan Yang CMT
Chief Technical Strategist
FXTimes

 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Commodities

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