Precious Metal Weekly – XAU/USD Caving Towards 1040?

Precious Metal Weekly – XAU/USD Caving Towards 1040?

Post 2008 economic crisis, the financial landscape has certainly adjusted to a very “new normal” where extreme interventions by central banks and governments are the norm. Whatever problem that caused the crisis, we are still in it and in actual fact – far from being resolved.

Greece remains unresolved despite the fact that it has been the less fortunate victim out of the PIIGS (Portugal, Italy, Ireland, Greece and Spain). Bailout talks continue internally and the Troika is back to tax the future of the Greeks’ people. Despite a referendum, Mr Tsipras has gone back to his parliament with a much “better” deal than before. Spain and Ireland made into the headline as star performers – pinning their recent success with much needed reforms.

China remains a problem child within the financial landscape. Call to suspend short selling, financial injection by the government, buyback programmes are just some of the temporary ways used to stem the fall in the stock market. Further selling happened simply because retail traders want out on any opportunity to reduce their losses. Countless retail investors are knee deep in debt and very much in trouble with margin call and potentially more financial distraught.

There is no denying that the current climate is not as dire as 2008 but the cold hard truth is that we are just one step away from repeating the same crisis purely driven by the same mentality – Greed. It is back – just a matter of time it hit the headline again and this time it might be a lot harder to undo the damage as the market remain far too complacent.

Weekly

Daily

The dollar continues to purge higher with last week price action suggesting that it may have met resistance near 76.4% fib retracement of April high to the low in May. We will not rule out a retest lower for support at the 20 WMA which could confluence with support of the rising wedge formation. Dollar is setting up for a big more next since its meteoric rise in 2014 has begun to consolidate. The weekly RSI is heading lower while price action continues to diverge. It is only a matter of time that it break below the 50 mark of the weekly RSI to instigate weakness. A higher dollar index remains on the table as long as the Federal Reserve remains undecided on a rate hike. One thing to ponder – does the current chart set up look like it is topping? Various well known banks call for a higher dollar – at least another 10% appreciation.

Gold Technical Outlook

However, we are not sure if this is the final purge or flush as the bears are so very close to take out 2014 low. Any more selling below 1100, we will have 1085 and 1061 as potentially key support levels indicated from as far back as 2010 price levels.

With no end in sight, future rallies are selling opportunities within this bear market. Other support zone lies at 1061 and 1040 levels if we are to see another sell off scenario. Physical buying may soon pick up again while buyers remain cautious and could continue to wait for lower prices. The seasonal gold event is soon upon us and that could relieve the selling momentum. In the short term, we could see a brief period of dead cat bounce followed by a potential dump and pump scenario.

Silver Technical Outlook

The weekly chart finally blip into a green candle after 5 consecutive weeks of selling. Silver price action on last Friday remains subdued by the 20 ma while the RSI showed sign of divergence. We cannot rule out the possibility of a break to retest previous low of 13.90 levels

Only a break and close above the 20 daily ma can give the long some confidence to test at least 61.8 and 50.0 fib retracement pullback. Other possible scenario is a potential double bottom at 13.99 but watch how price continue to drift within the downward channel (blue trend line) which open the gate to a potential $ 12.00 silver (2007 and 2009 all over again).

Failure to break above 20 dma could mean that additional selling is underway. “

Trade: Long on the break and close above 20 dma.
Position Valid Date Price Action Stop Loss Target Results
Long 03rd – 7th 15.10 Order Placed 14.70 16.00

Platinum Technical Outlook

The weekly chart shows a potential inside day formation as the candlestick pierced below the Bollinger band after a series of heavy selling. Has platinum bottomed for 2015? It could well have as the RSI is much oversold. In the short term, failure to close and break above the daily 20 ma suggests that further selling is in store.

Trade: Swing long again at 1001 level with tight stop
Position Valid Date Price Action Stop Loss Target Results
LONG 13th – 17th July 1001 Live 991 20 WMA -10
Long 3rd  – 7th 1001 Order Placed 991 20 WMA

Palladium Technical Outlook

Palladium could continue in play with a potential target of 578.8 for palladium. Weekly chart in Palladium also suggest a potential inside day formation. A close and break above 640 should relive the selling pressure and a bounce to 20 WMA will be the minimum target given that it has disconnected ever since 1st of June!

Position Valid Date Price Action Stop Loss Target Results
Long 3rd – 7th 640 Order Placed 610 680

Weekly

Monthly

This article is written according to the author’s views and by no means indicates investment purpose. Opinions expressed at Sharps Pixley Ltd are those of the individual authors and do not necessarily represent the opinion of Sharps Pixley Ltd or its management, shareholders, affiliates and subsidiaries. Sharps Pixley Ltd has not verified the accuracy of any claim or statement made by any independent writer and is reserved as their own and Sharps Pixley Ltd is not accountable for their input. Any opinions, research, analysis, prices or other information contained on this website, by Sharps Pixley Ltd, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. Sharps Pixley Ltd will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The data contained on this website is not necessarily real-time or accurate.

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