Gold and silver are bouncing from recent oversold conditions. They had originally meagerly bounced sideways for a few days, setting up the possibility for a bear flag break lower. However, the past two days have seen the metals (miners, too) pushing higher as equities sold off. Still, we are talking about broken charts here, with sloppy action, entangled moving averages and declining or flattening 50 and 200-day moving averages.
Although it is very easy to look at the past two days of price action and think what a no-brainer it was to get levered long for a simple reflex rally, in reality there have been plenty of times with similar setups where more carnage ensued, particularly when the initial bounce was so anemic. Even with the bounce the past two days in the metals, the first daily charts below of the gold and silver ETF’s, respectively, illustrate oversold conditions (daily RSI on top pane below 30) being alleviated, with no bullish divergences. Even though the tight bear flags have become more amorphous, the distinct possibility of a rollover exists.
Supporting that notion are the weekly charts after, which show neither gold nor silver has hit oversold weekly RSI despite the recent swoon.