Technicals | Mar 17 2016
Bottom Line 16/03/16
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 1050 – 1100 / 935 – 900
Resistance Levels: 1250 / 1312 / 1353 / 1399
Technical Discussion
We remain bullish precious metals based on the immediate technical picture. Yet there is one thing that we are presently a little cautious about, and that is the Commitment of Traders report (COT). Right at this juncture it shows that the Commercials are loaded up strongly on the short side of both Gold and Silver, with the Large speculative traders strongly long. The Commercials are generally right ! So the fundamental picture basis this report is negative, yet with our pattern analysis continuing to look robust. Perhaps the Commercials are anticipating the Fed Reserve to raise interest rates this week. That would certainly put a pin in our bullish bubble! [No Fed rate rise saw gold rally ~US$28 overnight to ~US$1261/oz – Ed]
Reasons to be neutral above 1192:
→ outlook improves above 1192, more so above 1353
→ sentiment has been strongly bearish yet the tide looks to be turning
→ major support zone holding
Our stance has reverted from bearish to neutral and will remain this way above 1192. This is the low point thus far in the handle formation of the bullish cup and handle pattern we are continuing to monitor. From our perspective the break above 1264 should have ideally taken price on another solid run higher, yet the Type-A bearish divergence has once again proven what a reliable indicator it is by triggering, with price quickly reverting back to the downside post tagging highs of 1288. So this is either price needing more time to complete the handle of the pattern, or we have a potential problem on our hands ! A little further depth from present levels will be ok, and a full unwinding of our divergence indicator should be a good platform for the next run higher to evolve from as well. Yet as stated, 1192 really does need to hold. Pattern target remains at 1450.
Trading Strategy
Our Gold 1 long trade at 1089 is going well with our stop position now sitting in profit at 1190. Our Gold 2 long trade at 1256 has yet to kick into gear with stops also sitting at 1190. The pattern will continue to hold symmetry above 1190 so we remain bullish short to medium term as a minimum whilst this remains the case.
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