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Global Trade Desk- Near Term Resistance On Gold Bullion

Daily Client Note

Gold Bullion Review


Gold Bullion 4-Hour Chart:
The break higher on XAU from 1550, which stood as near-term resistance, has allowed a technical test of 1600 to happen. The sustainability of the move will be determined by the reaction this week to mid-tier economic announcements and more importantly, to breaking news headlines concerning global government debt levels.

Those looking to get on the long side of gold bullion have missed the boat in the near-term, and should patiently wait for a technical pull-back that tests 1550 support. It would seem that buyers will now be entrenched around the 1525 area, which would be a main price point to gauge the strength of the buy-the-dip pattern of trade which has dominated this year.

It was reported to clients over the previous weeks that the 100-day SMA area at 1480 would be a major support point that was unlikely to be easily broken. It was from that area traders saw the recent bullish run bounce from, and is an area that is unlikely to be seen again anytime soon.

No new long-term long signals will form on XAU until a Weekly chart closes above 1610. No long-term short signals will form until a Weekly chart closes below 1480.

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ABC Potential:
The initial A leg move may be in place, with the move from 1475 t 1595. Any B leg pull-back in price that holds above 1550 this week will set up a potential C leg move that could technically test 1660.

This Week's Call To Action:
Look to buy the next test of support at 1550. The overall outlook on bullion remains bullish, and a buy-the-dip pattern of trade has dominated for two years now. Any short positions need reduced exposure and near-term targets, and should only be taken on the understanding that Gold Bullion trade is currently in a massive bull run that has plenty of support areas.

 A 4-hour chart algorithm signal was generated Jul 11 11 with a move below 80.20 which targeted 79.50, and has now completed its cycle.

Silver Bullion 4-Hour Chart
XAG is at the top of a price channel between 32.00 and 39.00 which was formed in May 2011 that is holding steady after the last test of support found silver bullion buyers. Although not as bullish as the overall Gold Bullion outlook, the potential for Silver movement does draw in a test of 49.00 if the pattern of buying the dips continues through 2011.

The 50-day SMA area at 36.00 has created a solid base for long momentum to build from technically, with little in the way of a potential move towards 42.00 in the near-term.

No mid-term long signals will form on XAG until a Weekly chart closes above 40.50. No mid-term short signals will form until a Weekly chart closes below 34.50. 

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ABC Potential:
The A leg move from 33.50 up to 36.90 reversed lower to form the B leg with a test of 34.90 support, as highlighted to clients last week. The C leg has tested 39.00 and looks to have completed its cycle. Traders should now be patient and wait for the next test of support to form. 

This Week's Call To Action:
Near-term intra-day signals are all that XAG is offering until a pull-back to support at 37.50 is seen. Buy the tests of support at the previous session low and sell tests of resistance at the previous session high as intra-day trades. 

These charts show that a mixed mid-term trend is in place, but also that silver bullion retains a bullish long-term bias.

A 4-hour chart algorithm signal was generated Jul 05 11 with a move above 36.00 which targeted 37.50, and has now completed its cycle. Clients were sent long near-term Trade Signals on XAG and SLV this week that paid out handsomely.

WTI 4-Hour Chart
The WTI crude oil chart is trading in a price channel between 90.00 and 99.00 which was formed in Jun 2011. This area forms the lower part of a price channel between 96.50 and 103.00 which was created in May and Jun 2011.  

The 200-day SMA area at 93.50 has been in play since the middle of June. The 50-day SMA at 97.50 and 100-day SMA at 101.50 will be major resistance areas that will not be easily broken in one session.  The technical outlook reflects very well the fundamental question marks surrounding crude oil valuations.

Right now the oil markets are in a volatile pattern of trade that cannot generate momentum to break and hold support or resistance with ease. No mid-term long signals will form on WTI until a Weekly chart closes above 101.50. No mid-term short signals will form until a Weekly chart closes below 88.50.  

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ABC Potential:
Choppy and overlapping chart patterns are caught in a 2-month trading range with no clear technical signals. The linear trend-lines formed over the last month of trade will likely contain price action in the near-term, until the day that a screaming headline announces a breakthrough on government debt outlooks.

This Week's Call To Action:
Near-term intra-day signals are all that WTI is offering. Buy tests of support and sell tests of resistance at the previous 24-hour session lows and highs. These charts show that fair value has been found on WTI. 

A 4-hour chart algorithm signal was generated Jul 13 11 with a move above 99.50 which targeted 100.50, which failed to trigger.