Is this the bottom?
Yesterday, Monday May 20th, gold and silver experienced their most violent movements since their shocking two day downturn in mid April. In the extended weekend session, silver broke down below long term major support at $22, a figure not seen since the fall of 2010. Buyers quickly evaporated from the market. Follow through selling caused silver to lose approximately 10% before ultimately finding support just above $20.
As the US markets opened on Monday, an incredible short covering rally ensued. The rally was further solidified by a rising euro. Moody’s had issued a warning that US debt concerns could prompt an additional credit downgrade. This drove the Euro rally even further.
Silver at one point spiked $1 in less than 5 minutes with gold jumping $30 in the same time frame. Silver had a $3 range on the day (which equates to approximately 15%) and put it in a key reversal pattern, as did gold. A key reversal is a bullish technical signal that occurs in a downtrend when an asset opens below the previous day’s close, makes a new low, and then closes higher than the previous day’s high.
$1,384 and $22.50 are price points to watch today for gold and silver respectively. If achieved at the close today, these price points will complete the latter half of the key reversal at the end of today’s trading. If not, watch the close over the next couple of days. These are indicators of a chart trend line, not a format for price prediction.
