The commodity complexes are all looking weaker as we begin a new trading week with Gold and Silver very much in focus.
Politics continues to swirl around the markets with the Trump trade pausing for breath at historical highs and Dutch and particularly French elections getting more and more attention. The EUR rally on Friday continued in the Asian session and early in the European session, only to be burst as Alain Juppe (long seen as a replacement for the embattled Francois Fillon – even though he was soundly beaten in the selection process) refusing to stand in the presidential election. The market has interrupted this as only adding to the nationalist Mari Le Pen’s bandwagon.
Commodities, often the beneficiary of geopolitical uncertainty are themselves suffering in the short term from the renewed interest in the USD as a FED move on March 15 is now virtually guaranteed but also the chances of a second US interest rate increase before September are now much higher so meaning the three rate hike story of 2017 still very tenable.
Technically, Gold and Silver formed Fractal Highs last Monday (February 27) following a weak Wednesday. This was followed by significant declines and closes on Thursday (March 2) with a breach and break of the (20 day moving average) on Thursday. Friday was positive but the week closed below the 20 day moving average. Short positions were taken on both Gold and Silver this morning on the 4 hour charts at 1234.00 and 17.84 respectively.
Gold; the Daily chart has 200 day moving average support at 1232.00 so this could prove strong resistance to a move lower and target 1 at 1225.00. MACD and parabolic SAR are negative and RSI at 51 is neutral but showing signs of weakness. The 4 hour chart also remains below the 20 period moving average, has negative RSI (39) and MACD. The Parabolic SAR turned positive on Friday. Target 2 is the lower Bollinger band and 14 period ATR on the daily chart at 1217.25. A break of 1245.00 would be required to turn Gold positive again.
Silver looks a little bit more vulnerable and volatile than Gold and target 1 is the 4 hour 200 period moving average and recent daily low at 17.70. Target 2 is the break of the 4 hour fractal low and Daily 50 period moving at 17.40. RSI, MACD and the parabolic SAR all remain negative on the 4 hour chart. A break of 18.05 and the 50 period moving average would suggest a significant retrace of the large move on Thursday (March 2) could be possible.
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