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.