Daily Client Note
Gold and Silver Bullion Review
Bullish Bullion Bandwagon
Gold and silver trade has re-built a bullish overall trend following test of support recently that confirmed the markets are willing to buy-the-dips. The 4-hour trends are indicating that trade will favor a test of resistance ahead of a major test of support, which sets up a buy the dip play from the next test of 1530 on gold and 35.50 on silver. The last 12 months of gold and silver trade have shown a strong tendency to find buyers at support. The potential for trade signals to form today is strong, outside of the fact that the market may hold fire on major moves ahead of the FOMC rate statement on Wednesday.
Volatile periods of trade continue to hit the bullion markets in 30-minute explosions of price action that then consolidate. Moves higher through resistance have struggled to hold for more than one trading session at a time, and buying the dips at support that offer the best trading potential. With equity momentum looking like it will transpose itself into USD mid-term consolidation, moves higher in gold and silver trade will continue to be choppy and overlapping.
Will they, or won’t they, that is the Greek default/rescue question that is clouding market sentiment in the near-term. Whatever happens in regard to Central Banking and regional Government debt, the world will continue to turn, and 24-hour globalized markets will continue to offer trading opportunities.
Tracking global sentiment and transposing that into a structured and actionable trade format is all that our trade desk is looking to do. With a mix of technical analysis, fundamental savvy, and algorithm confirmation, we turn global market momentum reads into trade signals. Right now, our program has signaled that gold and silver will easily hold support, and will now start to test main resistance points.
Gold Bullion Technical Outlook:
4 Hour Chart:
Tracking the 50-day SMA (green line) at 1515 support, with a linear trend-line also at 1515. The Fibonacci study shows a 50% reversal to support of the 145 to 1550 move higher. That reversal sets up a test of 1610 if 1560 can be broken and held this week.
A moved higher from 1450 to 1550.
B leg lower to 1510 support..
C leg has potential 1610 target
Call to action:
Wait for a weekly chart close above 1565, or buy the next reversal to 1520 area, repeating the same call from last week in a play that recently reversed and then broke higher.
Where To Now?:
- Gold generated a mid-term buy signal from 1520 on Jun 15 2011, which has not yet signaled to close
- Generated a near-term buy signal on June 17 2011 with a break above 1528 that targeted 1545 which has completed its cycle
- In a long cycle that will not change to short until a Weekly chart can close below 1505
- Upside targets will include 1565, 1580, and 1610 if a Weekly chart can close above 1560
- Expect downside moves that hit 1525 to reverse higher
- Outlook shows that a strong long sentiment still dominates overall
This is a technical and sentiment review that is signaling to buy gold bullion on any tests of support.
Silver Bullion Technical Outlook:
Trading in a tight 6-week sideways channel. The 100-day SMA at 36.80 resistance. Trend-line resistance is at 36.50, and trend-line support is at 35.00.
A leg looks to be forming long, with a move from 34.60 that targets 36.70.
Potential B leg lower to test 35.00 support.
Setting up a C leg higher that has a potential 37.50 target
Call to action:
Look to buy the downside tests of support between 35.00 and 35.50. No short trade until a Weekly chart can close below 32.50
Where To Now?:
- Silver generated a mid-term sell signal from 36.80 on Jun 10 2011, which has completed its cycle at 35.00
- Generated a near-term buy signal on June 20 2011 with a break above 36.10 that targets 36.75
- In a very mixed momentum cycle that needs a break that can hold steady for more than one day
- Downside targets will include 35.00 if 36.70 fails to break as resistance
- Outlook shows a tight trading channel that is building cause and effect for the next main break
This is a technical and sentiment review that is signaling to set near-term targets on Silver.
Bullion Support and Resistance:
Strong buying activity was seen at 1490 on gold, and at 33.00 on silver in April and May. These swing point areas have allowed a strong base to form that is unlikely to be seen again in quite a while, outside of margin manipulation issues at the exchanges.
Main gold support: 1470. Main gold resistance: 1560.
Main silver support: 34.00. Main silver resistance: 39.50.
GLD and SLV Technical Outlook:
The outlook for GLD (150.75) and SLV (35.50), the exchange traded funds (ETF) that tracks Gold and Silver bullion momentum, is for consolidation above 149.50 and 34.50, and to struggle to easily break support. The ETFs are likely to continue to lag behind the main moves seen in bullion futures contract trade, as major price action is taking place ahead of the US session each day.
GLD and SLV Support and Resistance:
Strong buying activity was seen at 144.50 on GLD in April, and at 32.50 on SLV in March. These swing point areas look to be solid price points that are unlikely to be easily broken.
Main GLD support: 149.00 Main GLD resistance: 152.50.
Main SLV support: 34.50. Main SLV resistance: 39.50.
Daily trading range is $16 on gold and $0.90 on silver, which are way below the historical norm and indicate that speculative interest is low on the selling days, and that the dips will likely continue to be bought. The 20-day Simple Moving Average (NYSE:SMA) on gold is at 1535. The 100-day SMA on silver is at 36.80. Gold bullion has a 12-month 90% correlation to the euro (Eur/Usd) currency pair.
Last three months of potential Gold and Silver bullion trade signals have generated eight trades, seven of which have completed, that covered 310 points of overall movement. Any misses have come on days that instant volatility hit the global markets in reaction to breaking news headlines. Most signals have been generated from 1-hour chart algorithms.
Alternate 24-Hour Trade:
Investors who do not want to wait for their regional cash market to open, or do not have 24-hour access to the market they have open positions in, are able to access the 24-hour currency market. There is potential to analyze and trade currencies in a high-volume market that is supported by the global inter-bank system.
Investors can trade currencies in-line with a rising global market, or trade ahead of a falling cash market open. Being able to use currencies offers the opportunity to be in a trade before the regional market opens.
Traders could trade the currency pair AUD/USD in-line with the potential seen in bullion trade. Buying the US dollar and selling the Australian dollar on days of equity and bullion weakness is a simple process of placing a sell order on AUD/USD. The position can be managed in a similar way that equity-based trades would be bought and sold.
Full detail of any trade signals that form will be emailed directly to clients.
Daily Client Note