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Gold & Silver; Downside Risk Increases

Alas, the typical last minute agreement after much discussion between the Eurozone and Greece Finance Minister – Yanis Varoufakis. Debt extension deals for another 4 months which will help repair the fragile confidence and push backward the inevitable tragedy for some time. Zero Hedge covered exclusively that “the Tsipras government now has to walk back essentially all the promises it made to the Greek people - promises which by some accounts amount to over €20 billion in additional spending - or the Troika, pardon Institutions, will yank the entire deal and the Grexit can then commence”. Eurozone cheered and equity market (Dow, S&P, Dax) rallied hard as we close the week despite the lack in volume and the rise was on the back of empty promises or rather a too big to fail equity market.

Simple irony here is that government continue to preach that reforms are needed among banks on “too big to fail” whilst ignoring the current equity market rally. This game has to continue for now with disastrous implications of more money printing, negative interest rates and big changes in government officials. Changes will remain slow and hard with no better alternatives around the game has to continue. We are not being a pessimist but rather a realists given the current discrepancy with what is being reported against the state on the ground.

Gold Technical Outlook

Weekly Chart

We will not discount the fact that XAU could potentially hit the lower Bollinger bands at $ 1143 before a possible rebound. This cycle for further downside has opened up with the seller holding a much stronger stance given a stronger US dollar and equity market. Only a break above $ 1245 will give gold the opportunity to continue higher, possibly retesting $ 1260 and $ 1295 area. Ever since 2013 and throughout 2014, gold has not been able to trade above 100 WMA and only barely trade above 50 WMA which further argues a downside resumption from for 2015 set to continue. Even the daily DMAs are heading lower, building up a bearish picture for next week with a break and close below $ 1197 opening up to $ 1189 and $ 1177.



Trade: Any rallies are opportunities to Short XAU – short positions for $ 1206 to $ 1216 area with a stop loss at $ 1226 for various key targets. Valid for this week only.

Contract

Valid Date

Price

Action

Stop Loss

Target

Results

XAU

16th – 20th Feb

1207

Closed

1191

1216

+9

XAU

16th – 20th Feb

1201

Live

1201 (1191)

1224

XAU

16th – 20th Feb

1197

Live

1201 (1191)

1235

XAU

23rd – 27th Feb

1206

Order Placed

1226

1189

XAU

23rd – 27th Feb

1211

Order Placed

1226

1177

XAU

23rd – 27th Feb

1215

Order Placed

1226

1160

20 WMA

50 WMA

100 WMA

1216 (+/-)

1260 (-3)

1295(-5)

 

Silver Technical Outlook

Weekly Chart

Commentary made last week confirmed our biased downside view with no upside action materialise despite trading higher “The upside is currently capped by 200 DMA at $ 17.43 and we felt that the start of next week could see silver prices testing lower before a possible retest to break above it. Break and close above $ 17.66 will allow the bulls to test $ 17.77 and previous high at $ 18.50. However, we remain biased for more downside as the weekly Bollinger band is starting to converge again. Our real concern remains at the long term downtrend line which could act as support and the lower Bollinger band may creep higher – possibly at $ 15.55 area. We see lower prices but well aware of the positive divergence in the weekly RSI.”

We continue to see $ 16.10 and $ 15.55 as potential targets for the bears to target before any real possibility of rebounding. Daily chart use of trend lines as well as reading of the candlesticks biased for further downside. This is despite divergence showed on the RSI which is holding on the rising trend line at 43. Break below this RSI will give the bear more selling rooms.

Trade: Short at $ 16.70 to $ 16.80 area with a stop at $ 16.95 to target lower numbers. Valid this week only.

The move higher could be a fake bullish move and we could take a small contract to short in the open with a stop loss at $ 17.66 and target $ 17.26 and $ 17.06 which are all important DMA that could act as support.

Contract

Valid Date

Price

Action

Stop Loss

Target

Results

XAG

16th – 20th Feb

Open (17.36)

Closed

17.66

17.26

+10

XAG

16th – 20th Feb

Open (17.36)

Closed

17.66

17.06

+30

XAG

23rd -27th Feb

16.70

Order Placed

16.95

16.10

XAG

23rd -27th Feb

16.80

Order Placed

16.95

15.55

20 WMA

50 WMA

100 WMA

16.72 (-4)

17.67 (-10)

18.89 (-8)

 

Daily Chart

 

Weekly Chart

 

Platinum Technical Outlook

Weekly Chart

Previous trading view has been invalidated as Pt prices plummeted out of the range that it has been trading since October 2014. With the MACD crossing lower and a falling stochastic, we cannot rule out much lower prices. Despite that, we could see a slight rebound to test what was support now resistance at $ 1170 and $ 1184 area before resuming lower.



Trade: Side line for now although we see a potential short lived rebound before resuming lower.

Contract

Valid Date

Price

Action

Stop Loss

Target

Results

Pt

16th – 20th Feb

1180

Order Placed

1162

1225

-18

Pt

16th – 20th Feb

1172

Order Placed

1162

1265

-10

20 WMA

50 WMA

100 WMA

1222 (-3)

1345 (-6)

1389(-4)

 



Palladium Technical Outlook

Weekly Chart

A bearish bear flag continue in this range trading – giving Palladium a true range to move about. The 100WMA provided support $ 765.99 for now and rebounded well to test higher numbers as well as forming a rather bullish hammer candlestick. If this range continues, a bounced off $ 765 area will give a reason for trader to aim $ 808 and $ 823 level which is the upper range. Last week price action was more of a pullback and only a break below $ 730 will favour us shorting the metal.



Trade: A break and close below $ 730 then we will consider shorting the metal which could retrace below $ 600 level.

Contract

Valid Date

Price

Action

Stop Loss

Target

Results

Pd

16th – 20th Feb

$ 765

Order Closed

759

808

20 WMA

50 WMA

100 WMA

784 (+1)

810 (+/-)

766(+/-)

 

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.

 



 

24 Feb 2015 | Categories: Gold

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