Market in Dilemma – Precious Metal Weekly

A market in dilemma is not a healthy market as investors and traders alike look for safe haven assets or in this case liquidate their positions and move to cash. The ever bullish stock market looks to be in dire condition after it enjoyed months at the spotlight of all time high. For once, many thought there will never see any correction. Unforeseen fears they say or rather the hidden agenda of keeping a positive view on the economy suddenly disappear for now. Market has no confidence and it is certainly in need of some stability. Where are we going to get confidence and stability back? Central banks such as China have put forward many stimulus policies but the lack of reform is the worrying aspect. The last ECB press conference revised their growth expectation lower and made potential promises of additional QE if needed. Meanwhile, we have covered this week in week out that the Fed and BOE are looking to take the punch bowl away.

So we are 2 weeks away from the eventful September 17th FOMC economic projections and statement, followed by press conference by Yellen et al on their take of a rate hike scenario. What may happened in this 2 weeks remain hard to see yet the market could continue to position for some sort of resolution and clarity from the press conference. Are we going to get more market noises from now till then? Yes, since the probability of a rate hike in September has severely decreased but one has to take note that any release of a decent economic data could tilt that in favour again. One obvious thing that has changed in the current climate is – any bad news is now bad news while good news deemed as good news vice versa.

Continued talk of China economic slowdown has not abated yet and analyst from several banks are calling for lower economic growth. We have seen the effect of what many in the mainstream called soft landing – yet they are not able to deduce what the current situation is affecting the global market. We start the week with a strong Japanese Yen, weak commodity prices and an equity market that is sagging. Maintaining such a course has thrown many investors off course and at the rate this is going – economic growth for 2015 could be put into questions.

The month of September is often turbulent yet there are opportunities lying abound – one has to look for it but do thread the market cautiously as we have the VIX index at the high as we enter into the new month.”

Dollar Technical Outlook

We expect the dollar index to find a period of consolidation ahead of the above resistance. On a break above the ascending triangle formation, the index has several key resistances and any sign of a blowing top will indicate a possible turnaround in the dollar index. It is quite possible that after the release of a rate hike, a reversal trade may play out.

The other message that it is sending is that the rate hike is imminent and positioning for this is in process and one must not discount that we could still see higher prices next week. However, please take note of the seasonal charts below as it paints a potential warning for the strong dollar. “

Weekly

Daily

Dollar buying continues with no respite post ECB press conference, giving dollar index an edge higher. Seasonality will play a big factor and we cannot rule out that a short period of consolidation may play out before we see a big reversal.

Gold Technical Outlook

We have the pullback and entered to short gold near the top and move stop loss to break even. Technically, we could see further downside to retest support at 1108 and 1095 levels should the AB = CD plays out (see daily chart).

We are impressed with the corrective move on gold prices and this is a healthy market that is pulling back technically. We are not ruling out a retest lower for support and If price bounced off the 1100 level then we could be in store for that inverse head and shoulder.”

Position Valid Date Price Action Stop Loss Target Results
LONG 31st – 4th Sept 1080 – 1090 Order Placed 1080 1180
SHORT 31st – 4th Sept 1140-1145 Live 1140 (move to breakeven) 1100

Daily

Silver Technical Outlook

Weekly candlestick paints a potential reversal hammer – as buyers attempt to take the price higher but failed yet more often than not, there is a strong intention there for buyers to try again.

The daily 20 ma has once again worked its miracle – acting as a strong resistance at the first attempt. We are not ruling out that if we see Silver price action to explode positively next week, that 20 ma and 50 ma bullish cross over will give the bulls more ammo to break higher. The downside risk remain here that what look like a bullish crossover is in fact a false alarm and retest of 13.90 levels could play out.

Trade: Worth a long if we see price retest 14.00 levels again.
Position Valid Date Price Action Stop Loss Target Results
Long 31st – 4th 14.00-14.10 Order Placed 13.90 16.00

Daily

Platinum Technical Outlook

Platinum failed to retest higher and we continue to compare the fractal pattern that will play out until the end of the year. For now, the fractal formation indicates a potential downside move to retest previous low at 950 levels. Weakness in the metal also complement with our analysis above that gold and silver will both see a retest lower for support before another grind higher. Short term resistance now stands at 1030 and 1000 psychological mark. Any upside is selling opportunity and the daily 20 ma will act as a strong one.

Trade:
Position Valid Date Price Action Stop Loss Target Results

Daily

Palladium Technical Outlook

Palladium is by far showing the longest weekly ma disconnect and all the rest of the moving averages are playing catch up with price action. Buyers step in at 520 level but an attempt to take it higher than 600 is now a resistance. No doubt it will take several attempt but we are not ruling out a retest of 520 levels again before a period of consolidation to break higher.

Technically, price action did break above the daily 20 ma but another retest failed and drove prices lower after it failed to close above the 76.4 % retracement. We see further pullback for now.

Position Valid Date Price Action Stop Loss Target Results
Long 521  Order Placed 510 630

Weekly

Daily

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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