Precious Metal Trade Idea – 21st 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 1173 1193 was retested again
Resistance Zones 1209 / 1213 and 1224 Failure to break 1209 for the 3rd time
RSI Indicator 50.47 Neutral – slightly bearish
Stochastic Fast and Slow No man’s land
Bollinger Bands 1213 and 1185 Looming Breakout
Candlesticks Negative Close (Open 1206 Close 1196)
Trade Ideas Range trading

The dollar bulls managed to gain grounds on Monday, taking out dollar shorts out of their position. Currencies such as JPY and EUR retreated and the hammered US bulls took gold out too. A retest of 1209 followed by relentless selling as the US open and equity market also picked up by “bargain hunters” to go long.

On the wire, Grexit is still the hot topic and rumours are rife with the government looking to sell their gold deposits to raise as much cash as possible. Meanwhile, a rate cut on deposit by the Chinese Government only did so much excitement and bulls gave up. Gold continue to trade in the range of $ 1177 and $ 1224 – with anything between that as range trading.

Should the US dollar pick up where it left off last week then we expect more downside and only a strong bearish momentum in the dollar can help propel gold higher again. Our weekly trading view also includes our long term take on gold trades as follows: –

Trading Instruments:  Silver                                                                                         Trade Size: 2 contracts

Technical Indicator Daily Chart Reasoning
Support Zones 15.72 and 15.56 61.8% retracement at 16.08 is broken. 78.60 at 15.72 will be last defence
Resistance Zones 16.56/16.60 and 17.45 Need 16.60 for a move higher
RSI Indicator 42.8 Bearish
Stochastic Fast and Slow Could consolidate – bearish
Bollinger Bands 17.22 and 15.89 Lower BB moved lower – bearish
Candlesticks Negative Close (Open 16.38 Close 15.95)
Trade Ideas Heading to test support at 15.89, 15.72 and 15.56?

Despite last week US dollar retreat, Silver failed to break any higher and the support at $ 16.06 were taken out at the start of this week. This further suggests that further weakness can happen as we reach the end of this corrective phase.

Looking back at our past trading view, the call to short the weak silver prices was correct although we missed out on a good entry point. Resistance now resides at $ 16.65 area and only a break above could neutralise further selling momentum. In addition, we are wary of the 200 DMA at 16.74 which could again prove a barrier for a move higher. Take those two out and we are neutral to semi bullish.

Meanwhile, Silver could retrace higher but subject to further selling should dollar bulls gain buying momentum again. We will not rule out a retest of $ 15.72 and $ 15.56 for good support. Enter a long at $ 15.60 with a 25 point stop loss to target $ 16.40 offers a great RR (reward at 80 points).

Trading Instruments:  Platinum                                                                                  Trade Size: 2 contracts

Technical Indicator Reasoning
Support Zones 1147/1136 and 1124 Tested 1147 with 1136 next?
Resistance Zones 1155/1186 and 1196 Failed to break above 1186 – Bearish
RSI Indicator 49.57 Broke below 50 – neutral to semi bearish
Stochastic Fast and Slow Bearish Divergence  continues
Bollinger Bands 1177 and 1128 Stabilising
Candlesticks Negative close (Open 1171.9 Close 1148.4)
Trade Ideas Indicators suggest selling pressure

Daily chart indicators are suggesting a strong selling pressure after it failed to retake $ 1186 which was April 2015 high. In addition, prices broke below the Daily up trend line that created after it bounced from the low at 1086 which may suggest that the corrective move is over and long term downtrend should resume. To neutralise further selling, Platinum need to reclaim the 1168 level at the very least. At the moment, selling bias outweighs this metal and any rallies are potential selling opportunities. We are looking to take a short position at 1158 stop 10 points risk to target 1136 (reward 22 points).

Trading Instruments:  Palladium                                                                                Trade Size: 2 contracts

Technical Indicator Reasoning
Support Zones 746/754 and 761 Low hit at 762.00 and rebounding
Resistance Zones 758/778 and 785 Took out all on Monday but gave it all back
RSI Indicator 52.96 Back to Bullish frame
Stochastic Fast and Slow Rolling over
Bollinger Bands 790 and 729 Rising upper BB
Candlesticks Positive close (Open 786.4 Close 773.9)
Trade Ideas Gap not filled and IHS back in play?

Our last daily trade idea covered how Palladium is a difficult metal to trade and that it is semi bullish with a potential to target upper BB. It did all that on Monday open but gave up the gains to retest the 38.2% retracement line of April high 786.50. It also failed to close above that previous high, instead only managed 786.40 shy of 0.10. It is needless to remind our readers that Palladium could consolidate for now but we are wary of a bearish RSI divergence on the 4 hourly chart. Such indication warrants us to short the metal on any corrective rallies to target 766, 752 and 740 again. Potential H&S formation on the 4 hour chart cannot be rule out!


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