Originally published on May 31, 2022 by TraderStef at CrushTheStreet
It’s time for a gold and silver technical analysis update as spring slowly ends in New England and the summer heat starts taking over. If you have not already done so, consider reading the full commentary in “Gold and Silver Outlook for Spring 2022,” Part 1 and 2 (Twitter thread) before continuing.
Gold is about to go through its last few weeks of spring seasonality. Unless a news event jolts the precious metals sooner, the price action is usually choppy until late June. To view a larger version of any chart below, right-click on it and choose your “view image” option.
Gold Bull Market 1970s vs. 2000s as of May 2022…
Gold Spot weekly chart as of May 31, 2022 5pm ET…
Excerpt from the Mar. 31, 2022 monthly gold chart analysis:
“The monthly candlestick for March ended as a bearish Plunger Candle (aka Shooting Star) with a $1,890 low and closed today at $1,937… Due to the accelerated price spike that tapped an all-time-high area, the chart developed a bullish Big-W pattern. As noted in the Mar. 4 analysis, a Throwback could revisit the topside trendline of the Symmetrical Triangle. As the days tick away, that trendline trends downward and is currently at $1,850. Don’t be surprised if it has a visit and is probed for support. Precious metals are currently in spring seasonality and the price action is typically choppy until the next rally in late spring or early summer… Despite the pullback, the monthly chart outlook is bullish. Don’t dismiss the fact that higher prices beget larger price swings and monthly chart indicators shift at a much slower pace than shorter time frame candlesticks. The chart is ripe for scalping intraday.”
Excerpt from the Apr. 28, 2022 weekly gold chart analysis:
“Gold has printed a high of $1,998 in April, a $1,872 low today, and bounced back to $1,896 by the end of New York trading hours… The price could still drop further into late spring and test the 50 Exponential Moving Average (EMA) and Symmetrical Triangle’s topside trendline near $1,850. A Falling Wedge may be forming, but it’s too early to call. If the price action taps $1,850, the Falling Wedge would morph into a Half Staff Flag. The DMI-ADX is still trending positive but indecisive, the StochRSI indicates that extended chop or more downside is possible, and the Money Flow and Momentum is rolling over. The good news is that Volume is falling with a Throwback in price and that’s indicative of oversold conditions. No major technical damage has taken place. The chart is neutral to bullish and ripe for scalping sweet spots until $1,980 is left in the dust before risking large paper positions for swing trades.”
In late March, an explosive rally took hold in the dollar (USD) and paralleled the U.S. stock markets third wave down. That combination and factors noted in the spring analyses forced gold into a substantial Throwback in mid-April which followed a one-day rally above $1,980 that failed in March. Gold rallied back to $1,980 in mid-April, but the USD rallied 4.5 points from Apr. 20 to May 12 with the largest spike through the first week of May. Gold landed on support just below $1,800 and on top of the 100 EMA, then printed a bullish Hammer Candle on May 16 on the daily chart (not shown). Gold immediately rallied back to the 50 EMA, printed an $1,873 high last week, and closed at $1,837 today (May 31).
As suspected, the initial Falling Wedge morphed into a Half Staff Flag after $1,850 was violated to the downside, and that price level is the battlefield average between the 2020 high and 2021 Eve & Adam Double Bottom. The longer this drawn-out consolidation continues, the larger an upside spike will be when $2,075 is taken out decisively. The DMI-ADX is still trending indecisive, the StochRSI is indicative of continued chop in the price action, the Money Flow and Momentum have not yet pivoted to the upside, and Volume continues to fall along with a negative price trend and that’s indicative of oversold conditions.
Gold is not out of the woods. Unless a major geopolitical or financial news event jolts gold out of spring seasonality before the end of June, expect volatility and consolidation to continue a while longer. The chart is neutral to bullish, and ripe for scalping sweet spots until $1,980 is left in the dust before risking large paper positions for swing trades.
Silver Spot weekly chart as of May 31, 2022 5pm ET…
Excerpt from the Mar. 31, 2022 monthly silver chart analysis:
“In the month of March, silver printed a high of $26.93 on Mar. 8, a low of $23.95 on Mar. 29, and closed today at $24.77. Silver also printed a Plunger Candle… It’s worth repeating that the $21.49 Fibonacci level has maintained its role as a support level through all volatility since the Jul. 2020 breakout and Aug. 2020 high. It deserves a gold star for performance. The chart is ripe for intraday sweet spot scalps, but caution is warranted before layering in large paper positions for swing trades until $29 and $30 are left in the dust.”
Excerpt from the Apr. 28, 2022 weekly gold chart analysis:
“Silver printed a high of $26.19 in April, a $22.87 low today, and bounced back to $23.18 by the end of New York trading hours. The first week of March printed an indecisive Spinning Top and closed out the monthly with a bearish Plunger. As usual, silver will take its marching orders from whatever gold decides to do in the near-term, and is in the neutral to bullish camp as long as $21.49 support holds firm. After the price actions pivots to the upside, silver will be ripe for intraday scalping opportunities. Caution is warranted before layering in large paper positions for swing trades until $29 and $30 are left in the dust.”
Silver follows gold’s lead and that certainly rang true in the month of May. The four weekly candlesticks look nasty at first glance, but there’s still hope for silver to break free. Note that the $21.49 Fibonacci (lateral support) level and Eve & Eve Double Bottom were briefly breached and immediately bought. That looks like a Bear Trap to me. And the Up Channel noted in last month’s analyses morphed into a bullish Broadening Bottom pattern due to the Bear Trap’s low. The price action is trying to break back above the 150 EMA and closed at $21.54 today.
The DMI-ADX returned to a negative trend in May, the StochRSI is trended negative, and Money Flow and Momentum are looking for a bottom to pivot off of. Volume is unremarkable, but it continues to fall along with a negative price trend and that’s indicative of oversold conditions. The chart is neutral and ripe for intraday scalping. Caution is warranted before layering in large paper positions for swing trades until $29 and $30 are left in the dust.
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