Bullion Daily
The following information is a guideline (trading plan) and should not be treated as financial advice. Not advice but banter and active in sharing trade ideas via twitter @sugardaddyFED
The Federal Reserve remains transitorily dovish and not ruling out a rate hike in June. It is obvious that it is very unlikely a June rate hike will happen due to drafts of poor economic numbers. The meeting minutes also highlight their concern that pick up in the US economy remain fragile but a rate hike will happen sometime this year. Analysts are pushing it to September as the most likely scenario. The dollar took it rather well despite the dovish remark and we are not ruling out that it has legs to test higher.
With the Bank holiday next week, we expect price volatility to pick up as traders look to position and square their book as we come to end of the month. Next week also host many key economic data and one in particular US GDP set to release on 29th May. Our take is that the outcome of either Dollar strength or weakness is totally dependent on the outcome from the economic data. This week, we are ending it with speeches from the powerful central banks – presenting Yellen, Draghi and Kuroda.
Gold has yet to find a direction and it may continue to build on support, consolidating between 1200-1210 levels. The impulsive run up expects a healthy pullback but we are slightly concern the pullback is rather impulsive. We also take note that the US dollar also rebounded violently higher and remains as a possible dead cat bounce until invalidated. Price volatility will return as and when economic data is release but we expect the trading range to remain rather tight.
Below are key levels that we will continue to monitor and this will change depending on price action.
Daily Resistance Levels:
- Previous high at 1232.31
- 61.8% Fib from Jan High to Mar Low at 1245.13
- 23.6% Fib at 1211.60 Mar Low to May High
- DMAs 200 at 1217 / 100 at 1211.98
- Previous low at 1210.80
Daily Support Levels:
- 38.2% 1198.74
- Several key DMA 50 at 1192.92 and 20 at 1198.47
No change after the dovish remark and Silver continue to trade within the range of 16.85-17.35 levels. At the moment, the price action has a heavy top with sellers holding on and we are not ruling out another test lower. A break lower will find support and level such as 16.40 -16.60 as a fertile area for longs to build on. On the daily, those levels hold the 50% and 61.8 Fib retracement area which should provide decent support. This also coincides with the rising orange channel line that should keep the run higher intact for now. Note the red AB – CD line could play out in the short medium time frame.
Below are key levels that we will continue to monitor and this will change depending on price action.
Daily Resistance Levels:
- Previous daily high at 17.75
- Psychological level at 18.00
- Downtrend line that coincide with 18.00
Daily Support Levels:
- Several key DMA levels with 200 at 17.00 / 100 at 16.62 / 20 at 16.55
- Apr Low to May High Fib retracement level at 16.92 / 16.56 / 16.41
Given that the rebound was weak, we have covered the small long from 1150 at 1156 before FOMC meeting minutes. Meanwhile, we see another pullback to retest lower numbers – possibly 1137 -1143 levels should be an ideal range to build long. Should the price action get to the levels mentioned, we expect the rebound to be impulsive and rally to retest previous high. Upside remains capped by the orange trend line which coincides with the 100 dma that acted as strong resistance. With that in mind, a healthy pullback is required – refuelling the bull to propel higher is certainly a possibility in order to take out the 100 dma.
Below are key levels that we will continue to monitor and this will change depending on price action.
Daily Resistance levels:
- Previous daily high at 1177.1
- 100 dma at 1177.87
Daily Support levels:
- Several DMAs 20 at 1144 / 50 at 1142
- Fib retracement levels 38.2% at 1155 / 50% at 1148.7
As long as price is above the 50 dma and within the rising channel, the upside bias is still intact (even though we are suspicious that a move lower could happen sooner or later). Price broke and traded below previously mentioned dmas which does favour a run to test for support at the lower end much higher. What was support now resistance at 20, 100 and 200 dma. Break below 770 then expect support to come in at 762 followed by 745 and 755 support zone. Current price action suggest sellers are in control for now and we are considering to short palladium should it retest 780 with stops at (shaded brown zone 790 – 795) and target 756 – 766 levels.
Below are key levels that we will continue to monitor and this will change depending on price action.
Daily Resistance levels:
- Previous daily high at 801.6 and 797.6
- 200 dma at 796.31
- Downtrend line (see the shaded brown zone)
Daily Support levels:
- DMAs 100 at 780.76 / 20 at 779.97 and 50 at 772.23
- Fib retracement levels 38.2% at 771.5 / 50% at 762.3
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