Trade view /
03 June 2016 at 7:37 GMT
The long-term picture remains mildly bearish, requiring a break of $1,300+ to confirm a bottom is in place after prices rallied from the November/December lows ($1,150).
Short-term pressure has returned after prices stalled in front of the previous resistance from January 2015. The recent dip to $1,200 breached previous horizontal and 38.2% Fibonacci support ($1,205) and this is a concern for the bulls.
After psychological support held this week ($1,200/oz) price action has remained subdued and ranged between here and key resistance at $1,220. The Fed look set to raise rates and this pressure looks to have capped upside for the short term. The nonfarm payrolls today should add the usual volatility and we prefer to trade the break, expecting a bigger and better run from the downside.
Management and risk description
A break to the upside should find better resistance in the $1,240-50 area and we expect the upside to be capped here. A break to the downside should accelerate through support at $1,192 to target $1,175 then $1,145 (Fibonacci retracements and horizontal supports).
Entry: Sell a break of $1,200 or buy a break of $1,225.
Stop: Stop for both trades should be set on a pull-back and break of $1,215.
Target: A break to the downside targets $1,175 then $1,145.
A break to the upside targets $1,240abd $1,250.
Time horizon: 1-5 days
— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more