On The Edge – Daily Bullion 11th June

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. You can also follow us via TradingView.com for the latest charts update.

Recent commodity price action has been subject to central banks around the world to cut interest rate bar the US Federal Reserve and UK BOE. This week we have had Obama rumour that the dollar is far too strong, followed by BOJ Kuroda on the Yen and last night expected interest rate cut by RBNZ.

Gold do benefit from all this volatility and the current price action seems to suggest that a stronger dollar has not created any major selling off. Short term support at 1182 and 1176 should hold but break below that then it will need to search for new support at 1155. The low at 1162 has made a corrective AB (completed a 5 EW) and if 1176 and 1180 hold (corrective ABC wave) then a possible rally on CD (another 5 EW) to a potential target of 1207 levels which also coincides with the 61.8% retracement of May high to June low (it is also where the 200 dma is residing at the time of writing).

However, we remain cautious on any rally that gold is doing and will scale out should it hit resistance levels.

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

Daily Resistance Levels:

  • 1192, 1200 and 1207 are next target
  • DMAs 200 at 1208 / 100 at 1203 / 50 at 1196 and 20 at 1193

Daily Support Levels:

  • 1163 and 1176

One of the most explosive metals does not have the arsenal to mount a serious breakout. We mentioned in our previous report that we are suspicious on the rally and without Silver having a strong kneejerk reaction, our confidence faded when it actually close below 16.00 levels. Thus, giving up most of the gain made on the day. What does this imply then? It is not ready to rally – as simple as that.

We are repeating ourselves here – last rallies on Precious metals have been led by Silver and only if we see a major movement upward then we are convinced that a swing low is in. However, we are looking to cover our short on a break of 16.40 and look to go long if the breakout comes with a force.

Looks like Silver is playing the scenario of finding that 15.70 – 15.80 levels for a better support before breaking out. We will cover all of our short positions accordingly. Should it fail to bounce at 15.70 and instead head lower then Silver and the rest of the precious metal is in serious trouble.

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

Daily Resistance Levels:

  • 200 ma at 16.74, 100 ma at 16.56, 20 ma at 16.67, 50 ma at 16.50
  • Upper BB line at 17.70

Daily Support Levels:

  • Lower BB at 15.63 and previous low at 15.58

We have covered all long positions at 1120 on this corrective rally – sure prices may just consolidate and break higher but we are not willing to take on the risk. Our bias remain for a relief rally here with resistance at 20 DMA and should price failed to break and close above then we could well see a repeat as shown on the chart (box 1 and box 2). Platinum is still bearish and sellers continue to dominate unless we see a big shift in price action. Our bias is to place shorts at any price levels between 1127 – 1135 levels.

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

Daily Resistance levels:

  • 100 dma at 1158 / 50 at 1138 and 20 at 1124

Daily Support levels:

  • Lower BB line at 1075 and previous low at 1087.5

We tested the market with a small long but got stopped out as price action was not supportive. However, we will try again near this level for a possible swing high play. With that in mind, the metal could be waiting for this afternoon US retail sales data that can be the catalyst either for that breakout higher or to break below that important rising trend line. We have yet to see any pullback and at the rate it is going, a retest for support at the rising trend line may ease the selling temporarily. We might consider to place long on a confirmation of another green candle (see yellow box). Otherwise, we maintain a bearish view as Palladium play catch up with the rest of the metals mentioned above.

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 786 / 100 at 777 / 20 at 768 / 50 at 771

Daily Support levels:

  • 733 and 720

Economic Calendar & Fundamental Analysis

Thursday 11th June

  • RBNZ cut interest rate – dollar boosted (risk on)
  • Australian economic data are much better than expected with higher employment numbers
  • Chinese industrial production number and retail sales are positive (risk on)
  • South Korea Central Banks cut rates to combat MERS (risk on)
  • All eyes on the dollar and US retail sales data / jobless claims
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