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.