Precious Bull still Intact – Daily Technical View 19th May

Bullion Daily

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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

Good day to all readers! We discussed last week on several grounds what we envisaged may happen in the precious metal world. The US dollar index has a bullish RSI divergence and it managed to carve out a bottom – giving way to the long awaited dead cat bounce. Gold look exhausted but Friday close above 1224.50 gave momentum for a test for higher as market opens on Monday 18th May.

5 green candles in gold further add the indication that we may have exhaustion around the corner and a healthy pullback is needed to carve out a wave 4. It has been a spectacular run from the bottom of 1178 to 1232, which is equivalent to 54 points. Should the price retrace by 50% then 1205 levels is a potential zone to reload long positions for a rally to wave 5.

Pullback on gold is a buy and our weekly commentary on “Build in May & Go Away” stands for now.

Below are key levels that we will continue to monitor and this will change depending on price action.

Daily Resistance Levels:

  • Previous high at 1232.31
  • 8% Fib from Jan High to Mar Low at 1245.13
  • Confluence zone at 1245 and if Gold can clear this then higher prices is expected

Daily Support Levels:

  • 6% Fib at 1211.60 Mar Low to May High
  • 2% 1198.74
  • Several key DMAs 200 at 1217 / 100 at 1211.98 / 50 at 1192.92 and 20 at 1198.47
  • Previous low at 1210.80

At the time of writing, the daily candlestick is a bearish engulfing one but we expect it to retrace higher before another sell off. This would be data dependant and we could get further momentum on the back of US Data in the form of Building Permits. US dollar corrective rally will find any scraps of data to work in their favour today after heavy selling for the last 2 weeks.

To highlight the commentary we made last Friday “Having taken out 17.45 which was resistance, Silver bulls opened up the possibility to target 17.80 and even the 18.00 area”. We were sellers at 17.50-17.60 levels as a corrective pullback in Silver is much needed so as to test and build for strong support to then rally higher. Please take note that our short positions is risky and we maintain the outlook to build long positions should we see the pullback materialise to 16.70 – 17.00 levels.

Below are key levels that we will continue to monitor and this will change depending on price action.

Daily Resistance Levels:

  • Previous daily high at 17.75
  • Psychological level at 18.00
  • Downtrend line that coincide with 18.00

Daily Support Levels:

  • Several key DMA levels with 200 at 17.00 / 100 at 16.62 / 20 at 16.55
  • Apr Low to May High Fib retracement level at 17.24 / 16.92 / 16.56 / 16.41

As per the commentary made last Friday, the 100 dma is a strong resistance for now. The rally has stalled and no surprise that a pullback here is rather healthy. We will look and wait for the pullback to fully materialise before entering a long trade.

Below are key levels that we will continue to monitor and this will change depending on price action.

Daily Resistance levels:

  • Previous daily high at 1177.1
  • 100 dma at 1177.87

Daily Support levels:

  • Several DMAs 20 at 1144 / 50 at 1142
  • Fib retracement levels 38.2% at 1155 / 50% at 1148.7

Palladium 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. However, the upside has been capped by the weekly downtrend line (shaded brown) and that could continue to be a strong resistance level. We also have the 200 dma in that confluence zone (796) which gave sellers the incentive to short. Only a break above 801.6 will allow the bulls to take full control and take the price up beyond 820 levels.

At the moment, a pullback here is healthy but any support should have a follow up buying in order to main this bullish momentum. The last line of defence for the bull is around 770 to 775 levels and a break below that could spell trouble.

Below are key levels that we will continue to monitor and this will change depending on price action.

Daily Resistance levels:

  • Previous daily high at 801.6 and 797.6
  • 200 dma at 796.31
  • Downtrend line (see the shaded brown zone)

Daily Support levels:

  • Several DMAs 100 at 780.76 / 20 at 779.97 and 50 at 772.23
  • Fib retracement levels 38.2% at 771.5 / 50% at 762.3
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