Precious Metal Trade Idea – 14th April

Bullion Daily

The following information is a guideline (trading plan) and should not be treated as financial advice.

Trading Instruments:  Gold                                                                                          Trade Size: 2 contracts

Technical Indicator Daily Chart Reasoning
Support Zones 1193 / 1183 and 1177 1193 broken aiming for 1183
Resistance Zones 1193 / 1200 and 1223 Layer of resistance at 1193 1198 and 1200
RSI Indicator 46 Below 50 and heading lower
Stochastic Fast and Slow Slow line has rooms to drop further
Bollinger Bands 1217 and 1172 Contracting BB – breakout?!
Candlesticks Negative Close (Open 120 Close 1199)
Trade Ideas 4 hr chart could lead to more selling

As posted at The Bullion Times, our weekly precious metal analysis sums up how Chinese economic data could play a significant part on precious metal – With China hitting the 7% mark, commodities currencies are all affected.

Moreover, gold bull has not really made a strong case given the dull and lifeless trading action at the start of the week. Gold kept a tight range of $ 1206 and $ 1197 – suggesting lack of market interest. At times, there were buyers despite a stronger US dollar (USD index weaken slightly in the late US trading hours) but by then gold is hovering below $ 1200.  With no real conviction from the bulls, bears took full control for now. This week economic data may add volatility to the market once again.

Bulls run out of gas and layers of what was support is now resistance at 1193, 1197, 1200 and 1206. Only a break and close above 1206 will neutralise further selling and only a break above 1213 will allow bulls to target 1224. We fear that they could run out of strength and retreat until we get another set of negative US economic data.

Taking out 1189 is a start and a small short position can be initiated. Should selling continue, look to add another short on the break of 1177. Below that, we seek 1173 which is the lower end of the BB where we can find strong support. Failure at that price then we are ready to make a new low for 2015!

Trading Instruments:  Silver                                                                                         Trade Size: 2 contracts

Technical Indicator Daily Chart Reasoning
Support Zones 16.60/16.35 and 16.09 61.8% retracement at 16.08 is providing a flimsy support
Resistance Zones 16.52/16.80 and 17.45 Various resistance zones to go through
RSI Indicator 42 Rooms to go lower
Stochastic Fast and Slow Both line indicate further selling
Bollinger Bands 17.30 and 15.97 Rising lower BB – contracting
Candlesticks Negative Close (Open 16.48 Close 16.28)
Trade Ideas In a symmetrical triangle formation?

All indicators are turning south and silver is holding on a flimsy support at $ 16.08 which is the 61.8% retracement from March low to high. Failure to break above $ 16.60 on last week’s short covering means the bull gave up.  Expect strong resistance now at $ 16.60 and only a break above that will allow the metal to target $ 16.80 (200 DMA).

Last week commentary “Same commentary as yesterday “We are not sure if there are any bulls around for silver until the next support at 16.09 or even 15.85 levels is hit. To relieve the selling pressure, we need silver to trade back above 16.70 to neutralise the selling momentum. “We are wary that current rise in price could just be a short covering rally.”

Our trade recommendation was not executed as we missed it by 15 points (see 10th April Daily Bullion report) and these things do happen as we try to prioritise a good risk management strategy. The selling pressure has not abated (last week was 4 selling day with 1 short covering day). This week, we expect a choppier price action and only a clean break of $ 16.00 will confirm our next short recommendation.

Trading Instruments:  Platinum                                                                                  Trade Size: 2 contracts

Technical Indicator Reasoning
Support Zones 1147/1136 and 1124 Hit support at 1147 after failure at 1186
Resistance Zones 1155/1186 and 1196 Hit Weekly trend line at 1186
RSI Indicator 46.83 Below 50 and heading lower
Stochastic Fast and Slow Fast line broke lower (bearish divergence)
Bollinger Bands 1175 and 1117 BB contracting
Candlesticks Negative close (Open 1172.1 Close 1153)
Trade Ideas Daily shows a Bear Flag/Pennant

Platinum broke below $ 1151 and below $ 1146 which is the 20 DMA – with resistance now stands at $ 1162 and $ 1193. Failure to break above $ 1186 (which was the 50% retracement line from January high to March low) has escalated more selling pressure.

Bulls need to retake 1146 followed by 1162 before it can target higher numbers.  Our worry from last week commentary is valid given that Platinum posted a doji candlestick but start this week with a daily bearish engulfing setup.

We see any bounce on Platinum as selling opportunities as all other indicators are heading south. The break below $ 1151 has turned us negative and expects support at 1136 and 1124. Looking to short at $ 1157 area with a stop at $ 1177 (risk 20 points) and target $ 1120 (reward 37 points).

Trading Instruments:  Palladium                                                                                Trade Size: 2 contracts

Technical Indicator Reasoning
Support Zones 756/749 and 743 Both 756 and 749 tested. Can it hold now?
Resistance Zones 758/779 and 785 20/50 and 100 DMAs
RSI Indicator 46.62 Below 50 rooms to move lower
Stochastic Fast and Slow Fast line crossed lower after 13 days of up

1st April to 13th April

Bollinger Bands 787 and 729 BB is neutral
Candlesticks Negative close (Open 776.5 Close 769.5)
Trade Ideas A failed IHS and gap not filled!

We start the week by shorting Palladium at 779.20 with a stop at 797 – closed one contract with a profit at 762 and holding the last contract with stop at breakeven. Palladium traded confidently higher on Monday but hit the upper BB which warrants us to take a small risk but high reward Short position. A break below 747 will target 740 areas to close the gap and sellers could use this momentum to target the lower BB at 729.


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