Monday, September 10, 2012

Gold and Silver This Week

Today we are going to look at both gold and silver and see what they have done this past week. In doing so we will see if we can get an idea of the direction that they maybe going in this upcoming week. When we evaluate a chart we are looking to identify several things. The first thing we want to evaluate is the trend that is occurring on the longer term charts, the second thing is going to be to evaluate the support and resistance levels. Once we have done this we can get a fairly good idea for what is happening with them. Let’s begin by looking at the Trend of both gold and silver. In the charts below we can see what is happening with their trends.

The one of the left is the chart for Silver while the one on the right is for gold. On this chart the 40 period SMA is on to help give us an idea of the direction things have been moving and where they may be going. A simple way to help define the trend is to look at the direction it is moving to show if it has been bullish or bearish. Notice that both of these charts have the Moving Average pointing up and the price is currently above the line. This would suggest that the movement wants to move up. If the trend is moving up that is the time we want to consider buying. If it is going down we want to consider selling. We need to be careful with just saying that we will buy if it is up and sell if it is down. In the current chart we can see some bullish direction with the trend but we would still need to have our rules tell us when to enter into a trade.

Now let’s look at the charts below to determine where there may be some areas of support and resistance. In these charts the red line represents areas of resistance and the green line represents areas of support. The idea is to look at buying when we are near support and selling when we are near resistance. Currently with these charts we can see that the price is sitting near the resistance area and may not be at the ideas location to be buying.

So when we combine these two thing we get an idea of when to look to buy and sell. What we would like to see is the moving average moving higher while the price is moving up off of the support area to buy and when the moving average is going down we want the price to be coming down off of resistance to sell. In the current situation we have the moving average going up but we are sitting near resistance. This does not put us in the best situation to be looking to buy. The most likely entry for the current charts are to look for a break back up above the resistance levels to confirm a bullish breakout.

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