FOMC Dilemma Continues – Daily View 20th May

Bullion Daily

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

Dollar mini vengeance on its way as we approach FOMC meeting minutes followed by Thursday economic data such as Jobless claims, existing homes sales and Philly Fed index. The data is expected to come in line but any hint of good data; we shall see the stronger dollar to add selling pressure on metals to retrace lower to look for support and this is where the psychological level at 1200 comes in play followed by the 20 and 50 dma (see notes below).

Morning comment made by Feds Evans has further play down any rate hike for this year (more details at forexlive.com). FOMC meeting minutes could remain dovish after several poor economic data. We cannot rule out that the momentum to raise rate remain “transitory” and very much data dependant. However, given that all the negative data are out at Q1 – market expectation is a slow and gradual pick up in Q2 and Q3. We remain steadfast with the same outlook that dollar is on a corrective rally here but the long term bull remains and could pick momentum in the 2nd half of 2015.

Expect a tight range trading as the market look to digest FOMC meeting minutes. Gold could whipsaw between 1211 to 1203 area. Breaks below 1203 then look for support at 1198 and 1193 as the last line of defence. 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 (updated).

Daily Resistance Levels:

  • Previous high at 1232.31
  • 8% Fib from Jan High to Mar Low at 1245.13
  • 6% Fib at 1211.60 Mar Low to May High
  • DMAs 200 at 1217 / 100 at 1211.98
  • Previous low at 1210.80

Daily Support Levels:

  • 2% 1198.74
  • Several key DMA 50 at 1192.92 and 20 at 1198.47

On the shorter time frame, Silver price action is clinging on key ma levels and at the time of writing, we have the hourly chart finding support at 200 ma at 16.96 then the 4 hourly chart at 50 ma. However, we cannot rule out that Silver could break lower again to find support and level such as 16.40 -16.60 is a fertile area. On the daily, those levels hold the 50% and 61.8 Fib retracement area which should provide decent support. This also coincides with the rising orange channel line that should keep the run higher intact for now.

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 16.92 / 16.56 / 16.41

Pullback was impulsive but platinum managed to find support at 50% Fib retracement level at 1148.7. The rebound is rather lacklustre; same applies to Gold and Silver which throw many question if this pullback is temporary or here to stay. We are building a small long at the 50% Fib but will not discount out that Platinum could retest lower before it can continue its rally. The daily chart shows that this pullback on the breakout level is healthy and should we get layer of support here then the bull may have enough momentum to break higher again.

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

All the daily moving averages are converging between 770-790 levels and recent price action has found support once again at 770-775 levels. This congested area also contains 38.2% Fib retracement and the rising channel (shaded yellow) could give further support. 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 maintain this bullish momentum. A break below 770 could target 763 and 745-755 support zone.

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:

  • 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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