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Precious Metal - Looming Potential Breakouts!

Weekend reading has served us rather well to catch up on current (potentially future) views and thoughts. Concern about the world economy is still the spotlight, continued fight of deflation and lower oil prices, China economy hard landing hitting the front page, volatile Middle East wars and the never ending tension between Ukraine and Russia seems to sum up a fair amount of uncertainty and volatility.

Looking at this week, China GDP data will serve as a catalyst to currencies that heavily depend on it. Further contraction in the 2nd largest economy could spell disaster as global demand could diminish and a snowball effect of fear may grip the market. The ever roaring Asian stock markets could take a temporary nose dive to correct and investors look to take profit off the table. Commodities market may well suffer a bout of fresh selling, which may escalate the deflationary effect on current prices.

Regarding Precious Metals, we continue to see that the bear rout will continue and it is biding time for the next breakout. There is no denying that decent rally on the back of short covering has excited the bull camp but bears continue to eat them for lunch. Our stance has not changed and we sense that market uncertainty may well provide the necessary volatility in the current market. There is no definite direction at the moment but a break of either $ 1224 or $ 1179 will help determine price action.

The lack of positive catalysts to propel gold higher will continue to print lower prices. US dollar strength set to continue and the equity market continue to provide a better alternative. This quarter has a lot more surprises in store and given future outlook, we stand firm near the bear camp for now.


Gold Technical Outlook

Weekly Chart

Gold failed to break above $ 1224 and has resumed lower, ending the week with a high at $ 1224 and low of $ 1192 – equivalent to $ 32 dollar move. Technically, gold is in a bear market and failure to breach above the 50% retracement from previous high of $ 1300 continues to add concern that the market could head lower. We will not rule out any short covering attempt that could take gold up to $ 1240 area but cautious that it could well be temporary only.



Trade: Below $ 1176 gold could go lower while a break above $ 1225 gives room for a potential IHS. Buy on the break of 1213 but raise stop to break even after it reach 1224. Valid for this week only.

Position

Valid Date

Price

Action

Stop Loss

Target

Results

LONG

13th – 17th

1213

Order Placed

1206

1242

SHORT

13th – 17th

1177

Order Placed

1188

1162

20 WMA

50 WMA

100 WMA

1213 (+2)

1240 (-4)

1272 (-4)

 



Silver Technical Outlook

Weekly Chart

Silver continue to correlate strongly with Gold recent price action. On the back of a stronger US dollar, silver found fresh selling after it failed to rally higher than $ 17.45. Our short trade on silver worked perfectly after it found support at $ 16.14 as the weekly low. The white metal ended the week with a red candlestick. To neutralise the selling momentum, Silver needs to trade above $ 16.61 but we fear that upside remains limited. The potential for further selling may continue to dominate as the bears look to take out $ 16.14 and may well target $ 15.50 area or even the lower end of the weekly BB at $ 15.31.

Trade: Short if it breaks below $ 16.14 with a 20 point risk as a stop to target $ 15.50. Valid for this week only.

Position

Valid Date

Price

Action

Stop Loss

Target

Results

SHORT

6th – 10th Apr

16.42

Closed

16.72

16.15

+27

SHORT

13th – 17th

16.10

Order Placed

16.30

15.60

20 WMA

50 WMA

100 WMA

16.61 (-3)

17.11 (-13)

18.37 (-13)

 

4 hour chart – On its last leg but expect support around $ 15.60 to $ 15.50 area.

 

Weekly chart – Upside remains capped and bout of selling could prices lower before it can resume higher?

Platinum Technical Outlook

Weekly Chart

Platinum prices managed to turn a negative week to a rather positive candlestick – with a high at $ 1186 and low of $ 1149.50. Our Long trade is stopped out and we will now remain on the side line. The weekly trend line is playing to perfection and further bout of consolidation is expected this week. We cannot rule out that Platinum prices may consolidate further should it break below $ 1149.50 to target the lower end of the BB at $ 1110 area.



Trade: No Trades.

Position

Valid Date

Price

Action

Stop Loss

Target

Results

LONG

6th – 10th Apr

1160

Order Placed

1151.90

1185

-8.10

20 WMA

50 WMA

100 WMA

1191 (-4)

1300 (-11)

1362 (-6)

 

Weekly Chart – Notice the Trend Line. Will prices set to retest the upper trend line before breaking lower?

Palladium Technical Outlook

Weekly Chart

Palladium erratic price action failed to fill the gap and prices moved higher – away from the rest of the other metals. Generally, it is trying for higher prices and we will not rule out that there is more to come. Despite that, we would like to point out that 4 hour chart is showing a divergence as higher price action did not materialise in higher RSI and the stochastic fast line has reached its overbought region with more rooms to consolidate lower.

Trade: Short between $ 787 areas with stop at $ 797 to target $ 760 area. Valid for this week only.

Position

Valid Date

Price

Action

Stop Loss

Target

Results

LONG

6th – 10th Apr

Open (758.30)

Closed

722

770

+12.70

SHORT

13th – 17th

787

Order Placed

797

760

20 WMA

50 WMA

100 WMA

784 (-2)

808 (-1)

7701(+1)

 

Weekly Chart – RSI holding on support – waiting for short term time frame for more confirmation.



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.

13 Apr 2015 | Categories: Gold

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