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The European Central Bank meets this afternoon in the wake of the Italian referendum and, despite the fallout not yet being of the magnitude that analysts had predicted, it looks likely that the central bank will calm a nervy market with an extension of its bond-buying programme.
Short term
Trade view / 04 October 2016 at 8:39 GMT

Gold returns to key support but strong USD threatens

Director / PIA First
United Kingdom
Background
The combination of a slightly stronger dollar tone, higher US bond yields and solid risk appetite kept precious metals prices on the defensive on Monday. Silver dipped and has broken support at $19.00 per ounce while gold sank further towards key support near $1,300.

Whilst, our longer term (Bullish flag) and intra-day trade (Key support) ideas continue with a dip buying at approach, if support breaks then there would be a short term selling opportunity.

Gold prices have been in a corrective channel since early July, with levels above $1,300/oz acting as solid support. We expect a fast move if this support breaks but also expect downside to be limited by an underlying continued safe haven bid and the bottom of the corrective channel.

Fibonacci retracement levels will act as targets for a break. We expect any extended move to stall in front of $1,250.

Management and risk description
Once 1st target is reached take partial profits and reset shorts on a reaction back to $1,300. A further drive lower show target $1,265-70 before a final swing to $1,252. 

Parameters

Entry: Sell a break of $1,300/oz

Stop: A move back above $1,325

Target: Early target of $1,287, $1,267 & $1,252

Time horizon: 2-4 weeks

Charts:
Corrective channel & fibonacci retracements
g1

Source: Saxo Bank. Create your own charts with Saxo Trader click here to learn more


Bullish flag on long term chart
g2
Source: SAXO Bank

— Edited by Clemens Bomsdorf

Non-independent investment research disclaimer applies. Read more
04 October
Steve O'Hare - First 4 Trading Steve O'Hare - First 4 Trading
First target reached for partial profit take. Stop can be lower to $1315 on any balances
04 October
Bullionaire Bullionaire
Sigh... didnt take it.
05 October
bancodemon bancodemon
took profit yesterday.. thanks Steve...are we going to see more moves to the downside going forward?
06 October
bancodemon bancodemon
Hello Steve, final target reached? Thanks :).....whats next ..please help... Thanks
07 October
Steve O'Hare - First 4 Trading Steve O'Hare - First 4 Trading
Monitoring reaction at these levels but no real sign of this move slowing yet

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