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 3rd 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.