The Tide Has Turned – Weekly Technical View

Precious Metal Weekly – The Tide Has Turned

We must stress that this remains temporary (i.e. a corrective rally) until invalidated!

As we approach the 2^nd half of May, we have seen a significant correction in the US dollar index which help propelled an impulsive move in the commodity market. Silver was leading the way, front running the worse than expected set of US economic data and a technical break out further raise the momentum to go higher. Equity market also took a small knock after the bond rout which saw rising yields in the bond market, both in the US and in the Eurozone.

Traders will keep their eye on the US dollar index over the next few weeks as market try to stabilise after rafts of worse than expected economic data. One thing for sure, we could see pressure for a weaker USD in the short term – supporting and stabilising equity market. However, the double edge sword in this scenario is Federal Reserve full intention to raise interest rate this year. Projection for a June rate hike has been squandered and traders are now looking for a September hike instead. With that view, we see a dead cat bounce in the recent USD weakness followed by another run lower – thus supporting a change in tide and higher commodity prices. We are also seeing the money flow from the bond market to Forex to commodity and equity.

Over the weekend, geopolitical news in the Middle East could destabilise global equity market. This is followed by the never ending fiasco of Greece debt problem. All eyes on economic data out from the US which could propel the Dow Jones and SP500 to another “artificial” all time high on a low volume RAMP!

Gold Technical Outlook

Weekly Chart

Interest and activity has started to pick up once again after weeks of range trading and lack of direction. The ground was laid several times for gold to move higher but failed throughout the month of April 2015! After putting up a negative weekly candlestick at a low of 1168, bargain hunters enter the fray and the selling paused. Once again, weakness in the US dollar has finally propelled the gold bulls to break pass various key resistance, building a solid support at key level of 1178 and move higher impulsively after the release of poor US economic data.

Looking back at all our previous (weekly report), we have notified readers about the potential looming breakout, how gold is so dollar dependant, build in May & go away and last but not least calamity signs ahead. We are mindful to buy and build on any pullbacks, given that the US dollar weakness could further spur interest in the yellow metal. Take note that US dollar may enjoy a short period of dead cat bounce which should allow us to build our long position followed then by another move lower – thus propelling gold higher.

Trade: Short stopped out. Looking to build on Pullbacks to capture the corrective rally.

Position	Valid Date	Price	Action	Stop Loss	Target	Results
SHORT	11th – 15th May	1195 -1205	Order Placed	1215	1160-1170	-15
LONG	18th – 22nd   May	1195-1210	Order Placed	1178	1233

20 WMA	50 WMA	100 WMA
1211	1233	1265

Silver Technical Outlook

Weekly Chart

We are always wary of Silver price action given how volatile it can be. Our suspicion are further aroused when calls are made by analysts that the bear rout on Silver prices is over and we are heading back to the glorious bull run. Fundamentally, the demand for silver as industrial metal is there but the ample supply and unwinding of speculative position has merely taken it back to down to earth. There are early signs that sellers have failed twice to take it lower beyond 14.00 which is the line in the sand for producers.

However, please take note that the Monthly chart has an RSI that is rising but it has yet to confirm a bullish divergence. We will take a close look for another test lower, probably below previous low of 14.03 while the RSI remain higher so as to confirm that the trend has indeed change. Technically, the weekly RSI suggest there are more rooms to the upside and this run up remains a corrective rally.

Trade: Pullback is still a buy but we will be cautious and look to build short if we reach 17.85 – 18.25 area. Valid for this week only.

Position	Valid Date	Price	Action	Stop Loss	Target	Results
LONG	11th – 15th May	17.15	Live	17.25 (16.50)	17.80
LONG	18th – 22nd May	16.60-16.80	Order Placed	16.00	17.80

20 WMA	50 WMA	100 WMA
16.60	17.65	19.12

Platinum Technical Outlook

Weekly Chart

Impressive move as Platinum regained all its losses made at the end of April 2015. The move high and recent price action suggests that this run has legs and could have further potential upside. The first sign is from the breakout of the weekly downtrend line at 1150 levels and we would not be surprise if next week retracement to 1140 – 1150 levels happens. If the support holds, this will further strengthen the case for a more potent bullish move. Important Weekly Resistance Levels are:

• 20 WMA at 1178
• RSI that might hit weekly resistance at 50 (NOTE that Platinum has not managed to break above 50 in 2015!!!)
• A POTENTIAL BEAR FLAG FORMATION?!

Trade: Buy the pullback valid for the next 2 weeks.

Position	Valid Date	Price	Action	Stop Loss	Target	Results
SHORT	4th – 8th May	1145 – 1156	Live	1160 (1186)	1085	-10
LONG	18th – 22nd May	1136-1146	Order Placed	1117	1185

20 WMA	50 WMA	100 WMA
1178	1278	1352

Palladium Technical Outlook

Weekly Chart

We want to highlight comments made from last week commentary that hit the spot “We are deviating slightly here but the daily chart shows that price failed to close above the 200 DMA and this could mean that a slight pullback in next week price action to test 780 levels but we expect the run higher to continue.”

Given that the pullback has happened and this is a healthy one, we expect a higher Palladium prices in the coming week with a target of 820 – 830 levels. Therefore, we are looking to build a medium term – LONG positions to anticipate the move. Currently, palladium is trading above the 20, 100 and 200 WMA. Next resistance to overcome is 50 WMA at 807.

Trade: Build LONGs on pullbacks. Valid for this week only.

Position	Valid Date	Price	Action	Stop Loss	Target	Results
LONG	18th – 22nd May	802	Order Placed	770	820-830
LONG	18th – 22nd May	782	Order Placed	770	820-830

20 WMA	50 WMA	100 WMA
780	807	774

This article is written according to the author’s views and by no means indicates investment purpose. Opinions expressed at Sharps Pixley Ltd are those of the individual authors and do not necessarily represent the opinion of Sharps Pixley Ltd or its management, shareholders, affiliates and subsidiaries. Sharps Pixley Ltd has not verified the accuracy of any claim or statement made by any independent writer and is reserved as their own and Sharps Pixley Ltd is not accountable for their input. Any opinions, research, analysis, prices or other information contained on this website, by Sharps Pixley Ltd, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. Sharps Pixley Ltd will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The data contained on this website is not necessarily real-time or accurate. 

Expect Healthy Pullback – Technical View 15th May

Bullion Daily

Still here just chillexing before another run up!

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

Technically, gold failed to close above the key level at 1224.5 despite putting a great amount of effort to overcome what was a strong resistance. With the recent 3 day rally, exhaustion is expected and pullback to retest 38.2% at 1204 and 50% at 1198 opens up. The high at 1227.70 is now key resistance and we cannot discount a double top followed then a reversal.

An Elliott Wave can also be identified here and this impulsive move on the daily chart is considered the 3^rd wave. Pullback to wave 4 is a healthy price action but we have to remember that wave 4 must not exceed the 50% retracement level or it is invalidated. In our limited knowledge of Elliott wave theory, we must take note that an A-B-C correction on the wave 4 may happen as well. Given that the US dollar index remain in damage control mode, a dead cat bounce should give enough reason for profit taking in gold but bids should come in at key support area to maintain the bull run.

One concern that we have is the reaction of the RSI which failed to break higher than the 61.13 levels. This can mean several things and they are – market is not overbought yet, the market could head lower to retest the lower end of the RSI at 41.98 for support and further range trading within the orange designated line could play out (see chart above).

A 3 day rally warrant a pullback and we are looking to short the white metal with a tight stop loss. A retest of yesterday high and failure there should allow us to short it and aim for the 38.2% and 50% retracement as targets 16.80 and 16.60. Pullback is still a buy and we are looking to build long in this upside range trading scenario. Silver often make the first move and we will continue to monitor a possible dead cat bounce on the dollar index.

Having taken out 17.45 which was resistance, Silver bulls opened up the possibility to target 17.80 and even the 18.00 area. However, we remain a seller should the price cross its path between those key levels (we will explain more on the weekly report).

The strong run up over the last few days has certainly caused exhaustion and once again short term pullback is expected here. We are not looking to short Platinum but waiting for a retest of key levels to go long. Having created a higher low, the price momentum should warrant a higher high in the short term. The targets we have in mind are 38.3% at 1147 and 50% fib retracement at 1142. We prefer the latter to enter a long and target 1175 – 1180 levels specifically. These are key resistance levels which sit the 100 dma as well as the 20 weekly moving averages.

Let us start by saying that this remains a difficult metal to trade as it does not show its hands often. Just as you are playing a poker game, this metal give you a straight face – win or lose! Either we are lack of experience at taming this metal or just clearly have no idea where it could go. Palladium mood swing is deadly as it takes no prisoners.

Having said that, the price action is still trading well above the 20, 50 and 100 dma and still within the rising channel – thus indicating further upside is still in store. In addition, it only retrace to 38.2% at 771 after the run up from March low to the high of May 2015. A retest lower cannot be rule out and a retest at 50% fib retracement at 763 levels will be healthy and even the 61.8% at 752 is a potential zone. If the support zone holds again at 752 – 762 area, we will enter a long trade to target 803 and above.

Bull Lands & Here to Stay – Daily Technical View 14th May

Bullion Daily

Should have read Gold & Silver not Wall Street!

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

We will reiterate our Build in May and Go Away motto which was written on our weekly report. For our followers of the weekly report, many would have noticed that we placed several shorts positions which were stopped out as we tried to test the resolve of this range trading. Yesterday impulsive move has certainly made a big difference since gains are kept, taking out various key resistance comfortably. Key support for the month of May is now at 1168 and 1178 respectively and this higher low has also produced higher high.

Our daily chart shows a potential new range trading area for Gold as it look to move higher with the following factors: weakness in USD look set to continue, global equity market is on a mini correction mode and last but not least gold seems to repeat its modest corrective rally as we approach June – July period (call it seasonal). Therefore, any pullback is a buy and we envisaged a modest target of 1260 and a possible extension to 1280 but no more. We will stand by our target until invalidated – that is if we break above January 2015 high.

However, we would like to add that this rally is once again a corrective one as gold continues to thread in the bear market. The Monthly chart will show that a healthy bull market will need to retest 38.2% fib (1274.4) as well as the 50% fib (1078.8). In the extreme event, 61.8% could also be on the card at (881). Meanwhile, we are looking to build long positions between the following levels 1195 – 1205 with stop at key support 1178.

Silver put in an impressive run and somehow front run the bad US retail sales. Buying from Asia and gains kept during London trading hours were significant signs for a big move. We were sceptical with such moves initially but as mentioned on the daily, the break out of the triangle favour another upside run “Silver is now trading above the 20, 50 and 100 dma and has the 200 dma in sight to tackle at 17.03.”

Pullback is a buy and we are looking to build long in this upside range trading scenario. A retest at 38.2% fib 16.60 and 50% fib at 16.40 are good area to go long and target set at 17.80 with stop at 16.00. This should provide a decent risk reward setups.

Having taken out the 20 and 50 dma, recent price action suggests more upside is in store. However, we remain cautious as we find resistance at 1150 – 1160 levels. A break out of the down trend line will be a positive sign and a retest of that line will send a strong buy signal to target the 100 dma at 1180. Should the price fail at the trend line again, we expect a retest of 1120 – 1130 area for support. We will remain flat until we get a clear signal in either direction.

After the Monday sell-off, Palladium continues to trade inside the negative candlestick and below the 200 dma that is heading lower (797). Recent price action failed repeatedly to conquer above 800 psychological levels. Such action could suggest a pullback could be in store and the break below 780 may target an AB – CD move from Monday sell off, giving us a potential target of 752 which will hit the previous strong support zone.

We will wait for further confirmation before taking any action on this.

Bullion Breakout Imminent? Daily Technical View 13th May

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

Monday sell off was temporary and shorts quickly covered their positions on Tuesday after severe weakness in the US dollar index caught the scent. We find it rather entertaining to see traders on Twitter making strong comments that this range trading and whipsawing action was down to unfair algo traders. Price congestion in this area indicates a few scenarios that we have already presented. Gold continues to mark the symbol of a bear market, so rallies are to be sold. Any rallies made are a corrective short covering action and the lack of market interest will continue for the foreseeable future (this is due to other alternative assets).

One has to take into consideration that the US dollar bull run may remain intact and despite the current price action (i.e. potential correction), any announcement of a rate hike by the Federal Reserve will tilt it back in favour.

Take note that Monday sell-off found support again at 1178.8 levels and this is now a key area to watch. A break below will favour the bears to take out 1168; the low made this month and potentially target the rising trend line at 1150 – 1160 levels. Failure to find support then 2015 low at 1143 will be the next target.

In order for our bearish stance to change to semi-bullish, only a break out of this range at 1224.5 will be sufficient to warrant a move higher. We favour another flush to the downside and looking to buy dips if permitted.

69

The current price action seems to indicate that negative economic data out from China is deemed positive for the white metal. Without reading too much into the symmetrical triangle pattern, we cannot ignore that it is breaking out and the daily chart favour another upside run. Silver is now trading above the 20, 50 and 100 dma and has the 200 dma in sight to tackle at 17.03. We do not have any crystal ball here but staying on the side line is the best option for now. Reading too much into the current setup could only increase the risk of stops taken out.

Upside remains limited with resistance from the 20 and 50 dma which comes in at 1141 and 1142 levels. As long as it is trading below the resistance level, we will not discount the possibility of lower prices in Platinum. A retest for support at 1120 might come in handy but if that fails to hold then further downside is expected. In the short term, we may see a retest on the orange line for a corrective rally. We remained biased to the downside with a retest of 1086 for a possible double bottom.

Palladium managed to find support even after the sell-off. The support came in at 38.2% fib retracement from April low and with the current price still trading above 20, 50 and 100 dma, the bulls remain in control. The pullback after it tested 800 is a healthy one and only a break below the rising trend line will put the recent rally into questions. Expect further upside in the short term and a break above 803 will allow the bulls to target 509 and 828 levels.

Taking everything into consideration, we will stay on the side line for now. A retest at 795 – 805 area cannot be discounted for a possible double top. If we see rejection, then we could expect a sell-off to retest the strong support zone at 745 to 755 levels.

Safe Haven set to Rally? Bullion Daily 12th May

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

Price action remained stuck within the triangle and gold has once again failed to break higher despite a weaker US index and this morning equity sell-off has not seen any relief buying on the metals. Technically, price continues to trade below the 20, 50,100 and 200 dma – indicating further downside at the moment. We favour another flush to the downside and looking to buy dips if permitted.

Take note that Monday sell-off found support again at 1178.8 levels and this is now a key area to watch. A break below will favour the bears to take out 1168; the low made this month and potentially target the rising trend line at 1150 – 1160 levels. Failure to find support then 2015 low at 1143 will be the next target.

To relieve further selling, price needs to break and close above the 20 dma at 1193. In order for our bearish stance to change to semi-bullish, only a break out of this range at 1224.5 will be sufficient to warrant a move higher.

Despite a rate cut by the Chinese government, the lack of economic growth has certainly dampened the demand for the white metal. At the moment, price action is still stuck within the triangle and market interest has not picked up either. Silver is just trading above its 20 dma and only a breakout will change the overall direction. Given that it is still in a bear market, a symmetrical triangle pattern indicates further downside for now.

Monday sell off has not treated Platinum well. Technically, price broke below the green line which was support and now we have drawn a new support line (thick orange). The green line will now act as resistance and a break below 1120 will give the bears the momentum to retest March 2015 low at 1086. In the short term, we may see a retest on the orange line for a corrective rally. We remained biased to the downside with a retest of 1086 for a possible double bottom.

After hitting a high of 803, we decided to close all Palladium long on the argument that price did not close above 200 dma. The trend line from September 2014 high also acted as resistance, with Monday opening price lower than Friday close which act as an indicator that a pullback is due. We note that Palladium managed to find support even after the sell-off. The support came in at 38.2% fib retracement from April low.

Taking everything into consideration, we will stay on the side line for now. A retest at 795 – 805 area cannot be discounted for a possible double top. If we see rejection, then we could expect a sell-off to retest the strong support zone at 745 to 755 levels.

Precious Metal Weekly – Calamity Signs Ahead?

We will continue to stick by our motto of “Build in May & Go Away”. As price action in the precious metals start to unravel, we standby the argument made last week and wait to be corrected (or invalidated) should price deviate from its course. Weakening US dollar index has not provide the gold bulls any concession to test higher prices – the broken correlation did not kick in and lack of market interest, especially one noted by recent Reuters report – Spot gold trading shrinks as interbank deals dry up!.

Short term to medium term projection is for a higher low and lower high in the precious metals market. Bob Dickey, technical analyst at RBC noted that correction in the equity market could give the incentive for investors to park their money on safe haven assets. We agreed with his current view that only a break beyond $ 1300 will give higher prices but do not expect an immediate rally as price continue to range trade between $ 1130 and $ 1300.  This is something we have commented repeatedly and traders should take heed as range trading continues to dominate this market. As of the time of writing, we picked up that Chinese economic number came with disappointment again. A rate cut of 25 bps has been formally made and for the benefits to kick in – will take months and the battle to keep a 7% economic growth is starting to get harder.

The next catalyst for a higher precious metal price now is to bet on a rampant economic recovery that lead to uncontrollable rate of inflation. We assumed that this is a better choice rather than having to see dire financial crisis or geopolitical risks that create bitter conflict between states. Some may disagree but surely our current situation cannot get any worse than this – one continues to ponder?

Weekly Chart

Watch how weekly price action shows strong confirmation that gold failed to repeatedly close above the 20 WMA. Repeat rejection further add the evidence that it remains in the bear’s control and only a close above 20 WMA will give us the signal to test higher prices. Often we see gold prices moved higher in the 1st quarter of the year, followed by setback in the 2nd quarter, but 3rd quarter recovery (which could unravel soon will have a higher low than the 2015 January high) and last but not least another low as we end 2015!

HOWEVER, we are looking for this short-medium term bearish trend to end and reverse soon. It will need to break and close above the 20 WMA followed by the 50% fib at 1225 to consider testing the 100 WMA which currently sits at 1266. We will be patient and remain steadfast on our trading plan (Build in May & Go Away!).

Trade: Short stopped out. However, we will build a medium long position at 1160 area.

Position	Valid Date	Price	Action	Stop Loss	Target	Results
SHORT	4th – 8th May	1190	STOPPED OUT	1197	1160	– 7
SHORT	11th – 15th May	1195 -1205	Order Placed	1215	1160-1170
LONG	11th – 15th  May	1150-1160	Order Placed	1142	1266

20 WMA	50 WMA	100 WMA
1210 (+/-)	1234 (-2)	1266 (-2)

Weekly Chart

Notice how Silver price is now trading out of the long term downtrend line after its massive rally to all time high of $ 50. We continue to expect price consolidation and a possible low to retest the 13.50 to 14.50 levels to confirm a reversal sign (with the addition of RSI divergence and a double bottom?).

Silver need to break out of this triangle with the following scenarios:

1) Bullish

If Silver price can break out of its mini triangle at 16.75 and 17.45 levels then we can turn bullish. A close above the 100 WMA at 19.17 will put us firmly in a bullish mode.

2) Bearish

If it breaks below 15.45 and will look to test support at 14.50 but if it breaks below that then watch out for a possible 11.50 – 13.50 levels

Trade: Looking to short Silver on the break out of the triangle formation. Valid for this week only.

Position	Valid Date	Price	Action	Stop Loss	Target	Results
SHORT	11th – 15th  May	15.50	Order Placed	16.00	14.50
LONG	11th – 15th May	17.15	Order Placed	16.50	17.80

20 WMA	50 WMA	100 WMA
16.53	17.67	19.17

Weekly Chart

Only a break higher above 1185 or out of the long term down trend line will be sufficient for the bulls to retake control. Short in this sellers’ market as price continues to trade below the 20 WMA which is now sitting at 1180. Our stance remains the same here, Platinum to have a corrective rally as long as it trades within the triangle – creating higher low and lower high. As long as it trades within the long term downtrend line, we will not go long.

Trade: Placing a Short position on Platinum. Valid for the next 2 weeks.

Position	Valid Date	Price	Action	Stop Loss	Target	Results
SHORT	4th – 8th May	1145 – 1156	Live	1160 (1186)	1085

20 WMA	50 WMA	100 WMA
1180	1284	1355

Weekly Chart

After taking out several key levels, Palladium put in a solid performance to end the week. We are deviating slightly here but the daily chart shows that price failed to close above the 200 DMA and this could mean that a slight pullback in next week price action to test 780 levels but we expect the run higher to continue. Coming back to the weekly, the price action will soon reach our price target currently sets at 809. We notice that the price action could continue to range trade within the red lines. Upon closing the long positions, we could wait on the side-line to confirm our next outlook. Alternatively, we could use Elliott Wave to anticipate the next move.

Trade: No Trades. Valid for this week only.

Position	Valid Date	Price	Action	Stop Loss	Target	Results

20 WMA	50 WMA	100 WMA
781	808	774

This article is written according to the author’s views and by no means indicates investment purpose. Opinions expressed at Sharps Pixley Ltd are those of the individual authors and do not necessarily represent the opinion of Sharps Pixley Ltd or its management, shareholders, affiliates and subsidiaries. Sharps Pixley Ltd has not verified the accuracy of any claim or statement made by any independent writer and is reserved as their own and Sharps Pixley Ltd is not accountable for their input. Any opinions, research, analysis, prices or other information contained on this website, by Sharps Pixley Ltd, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. Sharps Pixley Ltd will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The data contained on this website is not necessarily real-time or accurate. 

Pre NFP Bullion View – Bullion Daily 08 May

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. Subscribe or leave a comment as you please. Thank you for reading.

GOLD

Daily chart shows that price continue to trade below the 20, 100 and 200 dma – indicating further downside at the moment. We favour another flush to the downside and looking to buy dips if permitted.

NFP data is deemed to be worse than expected and it is no surprise that Q1 economic data has been taken negatively. In this new normal, bad data is deemed as good news as it stifles central banks to reduce spending. The show must go on-keeping the tap open on easy policies and money is the addiction of this market. Some are worried when the music will stop while others just continue for there are no alternatives. The herd mentality is “what could go wrong when central banks will bail us out again?”

Worry about liquidity and yield hunting assets continue to be the highlight of the current economic scenario. The VIX index shows no fear while bond yields around the developed economy are rising, other concerns are just temporary or shaft under the carpet.  Not much to add here really other than “strap on” and stay cautious as we expect turbulent on the price action.

SILVER

Nothing has changed as Silver price action continues to bounce on and off the ceiling and floor of this symmetrical triangle. Only a breakout of this range, then a retest of that breakout line – we can then be confident of the next direction. Technically, we will turn bullish on a break above the 200 dma and will place a long to target the trend line at 17.90 levels. A break below will take us to revisit previous low but should see decent rebound from 14.30 -14.50 levels.

PLATINUM

We have closed all our Short positions and as shown on the chart above, the green trend line has provided a short term support. Platinum is also trading in a symmetrical triangle, thus the higher low and lower high. A breakout is imminent and NFP could be the catalyst for this move. We are adamant that only a break out of the long term down trend line and trade above 1186 will give the bulls more wings. Meanwhile, we are biased to the downside with a retest of 1086 for a possible double bottom.

PALLADIUM

Currently, Palladium is trading above 20 and 100 dma which should provide reasonable support in the short term. The next set of resistance stands at 200 dma at 798.05 and Palladium need to break and close above this price level to resume higher. The other indicators are heading higher, giving a semi-bullish stance for more upside. With the RSI rising, MACD showed volume on an up day has certainly boost confidence. A re-test for support at the break of the inverse Head & Shoulder neckline is of no surprise. As long as the IHS is in play, we envisage a target of 840 -850 levels.

Strong support zone remains at 745 to 755 levels and must not be forgotten unless we break above 800 levels. Trade Palladium with care as this metal does not play by the rule.

Gold Technical Update – 07th May

Away from the desk today but will be back with the usual technical update tomorrow. Good luck and enjoy your day.

Precious Metals Dilemma – 06th May

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

Trading Instruments:  Gold                                                                                          Trade Size: 2 contracts

Technical Indicator	Daily Chart	Reasoning
Support Zones	1169/1173 and 1183	May low at 1169
Resistance Zones	1195/1210 and 1221	20/100 and 200 DMA
RSI Indicator	48.56	Battling between 40 – 60 area
MACD		Lack of momentum – no trend
Bollinger Bands	1213 and 1178	Lower
Candlesticks		Positive Close (Open 1188.39 Close 1195.25)
Trade Ideas		Another test of 1150 -1160 level

Despite a better than expected US non-manufacturing PMI data, the dollar tanked lower (possibly forming an A-B-C corrective rally). Equity market swooped south after a merry go round the bear trap successfully. All in all, it was a very volatile trading day for many.

Gold on the other hand, moved higher and tested $ 1200 but closed below the psychological level. Potentially, gold could move higher in this range trading (previously it stopped at 100 dma which currently sits at 1209 level. As we are in the month of May, we prefer to see lower Gold prices before buying dips. Therefore, our short term argument is for another bout of fresh selling to test support around 1150 -1160 levels before mounting a reversal. The theory for that fresh selling comes from a corrective rally as the US dollar index found support and continued speculation of a June rate hike will further fuel the corrective move.

Today we have US ADP employment change and Janet Yellen speech. Traders will be listening cautiously to any hint or shift in Miss Yellen’s stance on the rate hike. A sniff to the dove or hawk side will certainly cause move volatility. More reason to be cautious to trade Gold today.

Trading Instruments:  Silver                                                                                         Trade Size: 2 contracts

Technical Indicator	Daily Chart	Reasoning
Support Zones	15.59 and 15.80	Feeble support zones in this whipsaw action
Resistance Zones	16.88/17.00 and 17.21	50 % Fib, then the psychological level then the 200 ma
RSI Indicator	51.92	Need to break out of the 40-60 range
Stochastic Fast and Slow		Fast line threatening to head lower
Bollinger Bands	16.73 and 15.75	Contracting for a Breakout!
Candlesticks		Positive Close (Open 16.45 Close 16.59)
Trade Ideas		Range trading in a triangle

Silver failed to break above previous high of 16.75 and has retraced lower despite a much weaker US dollar. There are many reasons for a lower high as the white metal continues to trade within the symmetrical triangle. Thus, any upside is limited and the short term argument is for a retest lower to find support at 16.00 – 16.10 level.  Silver could retest lower numbers but support comes in at 15.75 – 16.00 levels (which is the lower trend line from the symmetrical triangle).

On a 4 hour chart, Silver has room to test lower and a short position can be initiated at market with a stop at 16.75 and target 16.16 (50%) and 16.03 levels (61.8%) Fib retracement from the low at 15.582 to high of 16.75. Look to raise stop to break even once price break 16.30.

Trading Instruments:  Platinum                                                                                  Trade Size: 2 contracts

Technical Indicator		Reasoning
Support Zones	1086/1117 and 1122	March low/April low and May low
Resistance Zones	1162.91/1184 and 1186.6	38.2% fib, 100 ma and 50% fib of January high
RSI Indicator	48.05	Rejected at 50 so heading lower
Stochastic Fast and Slow		Fast line threatening to head lower
Bollinger Bands	1171 and 1122	Heading lower
Candlesticks		Negative close (Open 1147.2 Close 1147)
Trade Ideas		Corrective rally – shorting opportunities?

We have an open short position as Platinum prices ran higher on a corrective pullback at 1148.6 with 1 contract stop at 1162 target 1136.4 (changed 1128). We have another short contract initiated at 1153.4 with stops at breakeven now and target changed to 1136.4. This trade is now risk free.

Our conservative limit order is a projection that supports recent Platinum price action. Since the low at 1086 of March 2015, a higher low was formed on repeated succession. Given that Platinum is also trading in a symmetrical triangle, profit taking within the triangle is best. We will not argue that our long term bearish view is to see a break out of the triangle and retest previous low.

The upside is limited due to the down trend line (weekly chart) and on that basis, further weakness is envisage. As long as prices trade below the 50% Fib retracement from January high 1186.60 then sellers have control.

Trading Instruments:  Palladium                                                                                Trade Size: 2 contracts

Technical Indicator		Reasoning
Support Zones	746/754/761/782 and 786	Trading above the 100 dma and previous high
Resistance Zones	798	Need to take out 200 dma
RSI Indicator	58.93	Need to break above 60
Stochastic Fast and Slow		Bullish momentum
Bollinger Bands	789.19 and 757.99	Rising for attempt to the upside?
Candlesticks		Positive close (Open 782.8 Close 788.85)
Trade Ideas		Continue to trend higher and found support

Palladium is now trading above 20, 50 and 100 dma which should provide reasonable support in the short term. The next set of resistance stands at 200 dma at 798.05 and Palladium need to break and close above this price level to resume higher. The other indicators are heading higher, giving a semi-bullish stance for more upside. With the RSI rising, MACD showed volume on an up day has certainly boost confidence. A re-test for support at the break of the inverse Head & Shoulder neckline is of no surprise. As long as the IHS is in play, we envisage a target of 840 -850 levels.

Strong support zone remains at 745 to 755 levels and must not be forgotten unless we break above 800 levels. Trade Palladium with care as this metal does not play by the rule.

A Data Dependant Bullion Market – 05th May

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

Trading Instruments:  Gold                                                                                          Trade Size: 2 contracts

Technical Indicator	Daily Chart	Reasoning
Support Zones	1169/1173 and 1183	May low at 1169
Resistance Zones	1195/1190/1210 and 1221	20/50/100 and 200 DMA
RSI Indicator	46.87	Battling between 40 – 60 area
MACD		Lack of momentum – no trend
Bollinger Bands	1213 and 1177	Lower
Candlesticks		Positive Close (Open 1178.52 Close 1188.39)
Trade Ideas		Another test of 1150 -1160 level

Afraid we do not see the current price action as anything but another range trading session which relies heavily on the next set of US economic data. As we are in the month of May, we prefer to see lower Gold prices before buying dips. Therefore, our short term argument is for another bout of fresh selling to test support around 1150 -1160 levels before mounting a reversal.

Watching the US dollar, it is on a corrective rally which could take the index back to retest 97.19 level (50% Fib from the daily chart which is also a retest on the neckline). We will not argue that the US dollar index continue might continue its bull run and lately, it has such a significance due to Federal Reserve intention to rate hike as early as June.  However, the implication of a strong US dollar will give the Federal Reserve a lot of reason to control it.

Gold 4 hour chart price action suggests continuous range trading with a bias to the downside. Due to the nature of recent price action (which is heavily data dependent), we are not banking on the fact that it will happen – but we prefer to remain cautious. Only a clean break and close above 1224 will allow the bulls to charge higher.

Trading Instruments:  Silver                                                                                         Trade Size: 2 contracts

Technical Indicator	Daily Chart	Reasoning
Support Zones	15.59 and 15.80	Feeble support zones in this whipsaw action
Resistance Zones	16.88/17.00 and 17.21	50 % Fib, then the psychological level then the 200 ma
RSI Indicator	51.49	Need to break out of the 40-60 range
Stochastic Fast and Slow		Slow line rising, need both lines to thread higher
Bollinger Bands	16.70 and 15.75	Contracting for a Breakout!
Candlesticks		Positive Close (Open 16.18 Close 16.45)
Trade Ideas		Range trading in a triangle

No change on Silver commentary as it continues to range trade. Price action is lock between 15.80 and 16.60 and only a break out of the symmetrical triangle will set the next direction. Yesterday price action suggests a rejection at the high of 16.76 and has retraced lower. In the short time frame, Silver could retest lower numbers but support comes in at 15.75 – 16.00 levels (which is the lower trend line from the symmetrical triangle).

We continue to remind readers that Silver too is in a bear market and the amazing Bull Run is unwinding lower. As long as it is still trading in the triangle, prices can whipsaw and only a clear breakout will dictate the next direction.

Will we see a solid move in May? Bear in mind that last 2 years – May 2013 and 2014 saw silver dipped lower before it resume higher in June! With that in mind, we could envisage a breakout from the triangle as we approach June (draw the triangle on the daily chart and you will see the confluence ends in June). Our bias view is to go long as we draw closer to June.

Trading Instruments:  Platinum                                                                                  Trade Size: 2 contracts

Technical Indicator		Reasoning
Support Zones	1086/1117 and 1122	March low/April low and May low
Resistance Zones	1162.91/1184 and 1186.6	38.2% fib, 100 ma and 50% fib of January high
RSI Indicator	48.77	Room to head lower for a bullish divergence setup
Stochastic Fast and Slow		Bearish Divergence  continues
Bollinger Bands	1173 and 1122	Heading lower
Candlesticks		Positive close (Open 1128.4 Close 1147.1)
Trade Ideas		Corrective rally – shorting opportunities?

Update on current Platinum open & close positions: Short initiated at 1162 with a stop at 1172 target the following area 1138 and 1128. Close 2 contracts for profit at 1138 and the other contract at 1128. We re-entered short as Platinum prices ran higher on a corrective pullback and short it at 1148.6 with 1 contract stop at 1162 target 1128 again. If Platinum moved higher again today, we look to add another short at 1153.3 levels with the same stop and target.

Take note that Platinum is also trading in a symmetrical triangle since it bottomed at 1086 and somehow, the confluence point of the triangle also ends as we approach the end of May. This clue may further reinforce our argument that a big breakout could happen in the metals sector.

The upside is limited due to the down trend line (weekly chart) and on that basis, further weakness is envisage. As long as prices trade below the 50% Fib retracement from January high 1186.60 then sellers have control. We continue to look for a corrective pullback higher and look to sell on rallies and only a break above 1186.6 will invalidate this stance.

Trading Instruments:  Palladium                                                                                Trade Size: 2 contracts

Technical Indicator		Reasoning
Support Zones	746/754 and 761	Low hit at 752.50 (double bottom) and previous Fib is back in play
Resistance Zones	782/786.40 and 798	100 ma, previous high and 200 ma holding upside
RSI Indicator	53.52	Bullish Divergence
Stochastic Fast and Slow		Fast line above slow line
Bollinger Bands	785.8 and 756.84	Contraction – Breakout looming?
Candlesticks		Positive close (Open 770.75 Close 782.8)
Trade Ideas		Continue to trend higher and found support

Recent price action on Palladium has been positive as it trade well above the 20 dma as dips are bought but found sellers as it hit the 100 dma. We expect Palladium to continue in this stance but it will need to show its hand and determine a new direction. We will not rule out that it could go higher once it can overcome the big resistance wall of 785 – 790 levels. Therefore, the IHS could be in play. Should this take effect, we envisage a target of 840 -850 levels.

If Palladium breaks lower then we will look for key support levels at 745 to 755 which have proven to be strong support zone and only a break below will give the sellers more control. Palladium could resume higher after it rebound off the 50% retracement high of 786.50. Next target for Palladium to conquer are top of the BB line 787 and the 200 ma at 799.97 followed by 846??

Meanwhile, the 4 hourly charts indicate strong range trading from the start of April. Should this continue, expect sellers to appear between 782 to 790 levels to target 750 to 760 levels as limit. We are waiting for further confirmation on how Palladium will react.

Trade Palladium with care as this metal does not play by the rule.