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Asian Precious Metals Update: May-2-2016

By: Chintan Karnani, Insignia Consultants

 -- Published: Monday, 2 May 2016 | Print  | Disqus 

Last week was the herd. All metals and energies rose at the same time. The US dollar depreciated along with below expectation US economic data releases. This resulted everything rising and breaking past key technical resistances. You went long with a high margin money in all metals and energies. You won. You went short and you got busted.


This week may or not repeat last week. US private ADP numbers on Wednesday and US April nonfarm payrolls is the key. A number below 160,000 will result in another big downward spiral for the greenback. April did not have any Easter employment. I do not foresee any spillover effect of Easters positively affecting US jobs number. The only risk could be past increase in previous month employment numbers. Japanese Yen against the US dollar below 105 (if any) will provoke direct intervention by the bank of Japan and will be create another short term bull cycle for US dollar denominated commodities. Middle East and Islamic state risk have not affected financial markets in April. I believe that this week continue too.


Low risk traders can book profit (on their long positions) just before the release of US April private ADP numbers on Wednesday. Looks for such signs. Thereafter depending on the fall (if any) all metals and energies need to trade over key weekly resistances to ensure continuity of bullish trend. For example suppose gold trades around $1327 in Asian session on Wednesday. Key weekly resistance is at $1308.20. In this case gold should not fall below $1308.20 before or after the release of US April private ADP numbers to ensure bullish trend continues. If gold trades below $1308.20 on Wednesday US session, chances of a sharp correction and big correction could be there. Most of us make the mistake of getting caught on the wrong side of the one way movement and make losses. Do not make losses by waiting for clear direction and then making a trade.


If you are uncertain, my experience is that one should not trade sixty minutes before the release as well as sixty minutes after the release of big economic data releases and key central bank meetings.


Sometimes headlines numbers may be misleading. Be wary of same.


Last but not the least, all metals and energies need to trade over last week’s closing prices for the whole week to continue their bullish journey. If they trade below last week’s closing prices, then chances of sharp correction will be there while maintaining the bullish trend.


Momentum as well as technical are all bullish for gold, silver and crude oil. They need to trade over current prices for the rest of the day to rise another two percent before close. Today it will not be a one way move. There will be large periods of consolidation followed by big one way moves. All eyes will be on the US dollar.


Gold needs to break and trade over $1309 to zoom. Silver this week as a technical congestion between $1810 and $1860. Overall trend is bullish. But a break of $1860 will result in $2120 and $2540 in less than ten trading sessions.


Crude oil needs to break and trade over $47.40 for another quick zoom. Copper is bullish but needs to trade over $231 for another quick zoom.



Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees  have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Prepared by Chintan Karnani

Disclosure: Insignia consultants or it employees do not have any trading positions on the trading strategies mentioned above. Our clients do have positions on the trading strategies mentioned in the above report.

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