Technical Forecasts

Resistance:	0.9780	0.9798	0.9817	0.9838
Support:	0.9734	0.9718	0.9697-02	0.9678

BIAS: I suspect a correction lower today



MAIN ANALYSIS: Yesterday's rally was quite persistent and reached to 0.9780 this morning. I am overall slightly mixed but feel the common theme I am seeing suggests a pullback lower. Just take note of the 0.9798 projection also. However, overall I see downward progress towards the 0.9718 corrective low - possibly the 0.9697-02 area. At these supports it wouldn't surprise me to see a mild correction higher. As long as this remains below 0.9780 we should then see losses below 0.9718 and 0.9690 to extend losses to 0.9645-55 at least. From this point begin to look for bullish reversal signals. The problem with this correction is that it has no ideal depth. Also note the 0.9630-40 area.

COUNTER ANALYSIS: Any earlier break above 0.9798 would extend gains to the 0.9838 high. Take care here as this is another area that could trigger a correction lower. Above note 0.9859-76 and 0.9898.
Good trading
Ian Copsey

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The U.S. Comex gold futures rebounded 1.60 percent last week, passed $1,400 on Tuesday and ended down 0.56 percent on the day (the market was closed on Monday). During Asian morning on Wednesday, the gold futures traded between $1,380 and $1,390. On Tuesday, the Dollar Index exceeded 84 and continued to climb during Wednesday open in Asia. The U.S. Dollar strength has been helped by the surging U.S. bond yield. The 10-year government bond yield climbed 16bp to 2.1652 percent this week and surged almost 50bp this month. After falling 1.07 percent last week, the S&P 500 index climbed 0.63 percent this week while the Euro Stoxx 50 Index surged 2.59 percent in the past two days.

U.S. Confidence Surged while Japan’s Volatility Climbed

The U.S. economy looks like it is back on track. The May consumer confidence index jumped to a five-year high at 76.2, compared to an expectation of 71.2 and 68.1 in April. The S&P/Case-Shiller index of house prices in twenty cities rose 1.12 percent in March and 10.87 percent over a year ago. Home and stock prices gains will likely boost consumer spending in the next quarter and offset some of the negative effects from the fiscal tightening beginning this year. In Japan, the 10-year government bond yield jumped 30bp this month from 0.6 percent at the end of April. According to Bloomberg, the implied volatility of the 10-year JGB futures reached 7.23 percent, the highest level since November 2008, after a disappointing 20-year bond auction on Tuesday. The BOJ governor has expected that the central bank’s bond purchases would lower the bond yield and support growth. Instead, corporate bond yields and mortgage rates have climbed. The Japanese stock market’s implied volatility also surged to a two-year high last week.

Physical Demand and “Smart Money” Positioning

The quick drop last month in gold prices has prompted physical buying in Asia, the Middle East, U.S. and Europe. This has offset the outflow from the gold-backed ETP products which reached 441 tonnes year-to-date, compared to the net inflows in the past two years of 476 tonnes. However, the physical demand has slowed. As of 28 May, the gold premiums have declined to about $3 to $3.50 an ounce in India compared to $10 to $12 earlier in May while the premiums dropped by a half to $3 in the past week in Hong Kong. The U.S. gold coin sales have normalized to about 52koz month-to-date versus 209.5koz in April. The CFTC reported that the managed money accounts have reduced their combined net-long positions in gold to 35,686 contracts for the week ending 21 May, the lowest level since September 2009. However, the producers, processors and merchants in gold, called the “Smart Money”, pushed the net commercial combined positions to -67,821 contracts, the most bullish level since the gold price bottomed in October 2008. This may signal that the gold prices are bottoming.


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Market Review - 29/05/2013 23:17GMTDollar tumbles on broad long liquidation

The greenback tumbled against majority of its peers on Wednesday as U.S. Treasury yields fell from their recent highs, prompting investors to liquidate their recent long dollar positions.

Earlier in Asia, despite a brief rebound to 1.2864 in Asian morning, the single currency dropped to session low at 1.2838 ahead of European open. However, price found good buying interest there and rallied in European morning on dollar's broad-based weakness, euro climbed further to an intra-day high at 1.2977 ahead of New York open as a decline in U.S. bond yields prompted investors to sell the buck. Later, price pared intra-day gains and retreated to 1.2919 in New York afternoon before trading narrowly.
Versus the Japanese yen, although the greenback dropped from 102.53 to 102.02 in Asian morning, price recovered to 102.48 ahead of European open. However, price fell sharply to 101.53 in European morning on active cross-buying of yen before tumbling further to an intra-day low at 100.71 on dollar's weakness. Later, price pared intra-day losses and recovered to 101.18 in New York afternoon.
The British pound rebounded to 1.5038 in Asian morning before dropping in tandem with euro to session low at 1.5008 ahead of European open. Despite rebound to 1.5071 in European morning, cable fell briefly but sharply to 1.5025 after the release of much weaker-than-expected CBI distributive trades. However, dollar's broad-based weakness pushed the pair higher and cable rallied to an intra-day high at 1.5147 in New York morning before trading sideways.

U.K. CBI distributive trades in May came out at -11, worse than the expectation of 3.
In other news, BOJ senior official said 'many market participants asked BOJ to buy JGBs more often in smaller amount; many market participants said BOJ should avoid buying JGBs on JGB auction days; hope to announce JGB purchase schedule for June sometime late on Thursday.'

On the data front, German unemployment rate in May remains at 6.9%, same as the forecast. German CPI in May came in at 0.4% m/m n 1.5% y/y, vs the forecast of 0.2% n 1.3% respectively.
Data to be released on Thursday:

Australia building approvals, private capex, Swiss GDP, Italy PPI, EU economic sentiment, business climate, consumer confidence, Canada PPI, U.S. GDP annualised, PCE, jobless claims and pending home sales.


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Bullion Round Up

The recent activity in gold prices sent mixed signals and traders remain cautious in taking any positions. Gold has managed to close a higher lows as it trade in the ascending triangle formation. It is clear that there are buyers with strong hands at $ 1350 and $ 1360 area but selling remain dominant every time the yellow metal tried to overcome $ 1400. Given the one-sided bearish sentiment, contrarian analysts are looking to follow the “smart money” investors who are betting for higher prices. Short sellers are holding record amount of positions and sooner or later a short covering rally will be triggered. It is a matter of when and not if as long as prices continue to break higher.

Recent gold strength also came from a weaker US dollar index and global equities. The “sell in May, go away” sentiment still lingers but the US and Europe equities are faring much better compared to the unstable Nikkei index.

Physical demand continues to support gold prices despite the continuous outflow from gold back ETFs. The recent sell off added pressure on the supply side and premiums for bars and coins rose. Emerging countries are the main benefactor as they continue to buy physical goods and central banks are doing the same. The outflow from ETFs could soon reach an extreme level as the weak hands or speculators take their capital and move it to equities. Others argued that investor’s confidence on ETFs have reached an all-time low, forcing many to opt for the physical metal itself. Gold continue to attract investors who are looking to diversify their portfolio as well as owning a safe haven instruments. The global economy as we have covered in many of our commentaries are not looking any rosier and a trip back to previous financial crisis could easily unravel market confidence.

Looking forward, a short term rally in a bear market is to be expected. As per our previous commentary (see below), this rally could take away those short sellers with weak hands but we would like to warn that this rally has got limits. Another bout of short selling opportunities is in the making and we would not be surprise that resistance at $ 1487 will be strong.

A clear break above $ 1400 and closing above that level will give the bull an edge. CFTC report showed that Hedge Funds are holding large short positions and should gold prices moved higher; the pressure to short covering will be immense. Despite that, gold continue to face strong resistance and selling pressure. It needs to take out $ 1404 followed by $ 1417 and a close above $ 1440 will be a game changer. Upside potentials are there but we advise caution as gold is trading in a bear market. Another failure to break $ 1487 will confirm that a retest to lower prices is in the cards. Getting above $ 1440 and $ 1450 level is considered neutral ground if one look at the weekly chart. In order for the bull to regain confidence, we need to see prices trading above $ 1525 level again. At the moment, it seems a lot harder to reach that scenario unless we see a pick-up in sentiment.

Gold Technical

Gold broke out of the physiological level $ 1400.00 and managed to keep most of its gain. Positive catalysts have finally helped gold to propel higher. The US jobless claim data rose by 10k against expectation while US GDP data came in lower than expected at 2.4% instead of the 2.5% projected. This outbreak could soon send the short sellers running for cover. When this happen, prices could escalate higher and we might be in for a treat today as it is the end of the week and month.

Resistance: $ 1423, $1437, $ 1438 Support: $ 1396, $ 1373, $ 1325

Bullish – target $ 1460

Bearish – target $ 1280

Silver Technical

Silver managed to break higher after a retest of previous low at $ 22.20 area. Previous selloff to $ 20.00 has created a strong reversal hammer – suggesting that the end of a bearish trend in silver could be in the cards. However, we felt that the upside on silver remains limited to $ 24.50 and $ 25.50 area. Only a break above $ 28.50 will give the metal more rooms to break higher. Meanwhile, a break above $ 23.23 will give the bulls more ammo to retest $ 24.50 area.

Resistance: $ 23.19, $ 23.65, $ 25.59 Support: $ 22.05, $ 19.66, $ 19.00

Bullish – Retest $ 24.50

Bullish – a potential bull run?

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Good morning everyone. *We are now into the month of June & getting in to the first week things are looking promising. *Most of the pairs seem to have broken out of a range & are in correlation. *Expecting USD to strengthen & gather steam. *Mixed sentiments on Japanese Yen. I’m adding a hedged pair to offset the trading riskt today. Happy trading everyone!!

Forecasts OutlookUS Dollar : Strong
Today we're expecting the EURUSD to proceed Long above the barrier levels of 1.29511 and 1.29813.


Fundamental Watch- Manufacturing PMI

- ISM Manufacturing PMI




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Bullion Round Up

The Nikkei was the highlight of the week at the beginning of May – posting all time high and once again it stays in the spotlight as it endure severe correction. Both events were unprecedented as the BOJ rolled out the Abenomics plan and injected the economy with large amount of quantitative easing. Inflation target of 2% is set and PM Abe vouched to open more trade routes in order to bring back Japan glorious days. The market sell the Yen in droves, the Nikkei rose as companies are expected to hit bumper profit as they are more competitive. However, there is always a “but” in the current aggressive policy. The volatile Japanese Government Bonds (JGBs) sent mixed messages and BOJ Governor Mr Kuroda did not communicate appropriately to the market. Yen started to strengthen and the stock market took a beating. Unintended consequences such as the above put a stop to the rallying US dollar and global equities are suffering although not at the same rate as the Nikkei.
We continue to expect that global central bankers will remain accommodative. The ECB have cut interest rate and the Troika have eased austerity programmes on several troubled countries. Promising more time and a relax deficit reduction so as to promote growth. The Eurozone economies continue to face contraction and rising unemployment. The systematic risk of undergoing further austerity may do more harm than good.

Mr Draghi may could either talked down the Euro further in this week meeting or he could come up with additional new policies. The market is watching what he could do to help the recovery in the Eurozone. There were talks of introducing a QE programme by the ECB but no real confirmation as for now.

Economic data that we are watching this week are Euro manufacturing PMI, US ISM manufacturing index (Monday), US Trade Balance (Tuesday), Euro GDP quarterly data, US ADP nonfarm employment change (Wednesday), GBP and Euro interest rate decision (Thursday) and US nonfarm payrolls and unemployment rate (Friday).

Gold Technical

Last Friday was the end of week and end of month trading with gold setting the tone with a sell off. Prices rose to a high of $ 1422 due to a weaker US dollar but late afternoon better than expected US data pushed dollar index higher. Selling escalated and gold gave back all the gain made after overcoming $ 1400.00. Late US trading hours, it broke below the psychological level and took our previous support $ 1396.00. The bullish set up made is put into question once again as the US dollar could reign supremacy and gold could only hope for that eventual short covering.

Looking forward, a short term rally in a bear market is to be expected. Another bout of short selling opportunities is in the making and we would not be surprise that resistance at $ 1487 will be strong.

Resistance: $ 1423, $1437, $ 1438 Support: $ 1390, $ 1373, $ 1325
Traders Notes: Longs are taking positions at $ 1398, $ 1400, $ 1406 and $ 1414 with a stop loss ranging from $ 1373, $ 1385 and $ 1390 area. Profit target sets at $ 1424, $ 1445 and $ 1460 area.

Bullish – target $ 1460

Bearish – target $ 1280

[/h]Silver Technical

After a one day swing higher, Silver took another sell off in the end of the week trading session. The strong US dollar took gold and silver lower – with both metals giving back all the gains made. Despite that, Silver managed to find support at previous pivot is of $ 22.20. The hourly chart shows an oversold market but the 4 hourly charts say more downside can be seen. A break below $ 22.00 will add further selling pressure but we felt that buyers will appear and push the market higher from here. In the meantime, further weakness can be seen as the market struggle to recover.
Resistance: $ 23.19, $ 23.65, $ 25.59 Support: $ 22.05, $ 19.66, $ 19.00

Traders Notes:Longs are taking positions at $ 22.40 area but with a wide stop lossat $ 21.75. Potential profit area comes in at $ 23.20 area and othersare targeting higher numbers.

Bullish – Retest $ 24.50

Bullish – a potential bull run?

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INTRADAY CHART



4th June:

I have to say this is mighty complicated but attempting to judge the final stalling point above the Wave (B) of (V) we should see Wave -iii- stall in the 198.4%-238.2% % projection at 97.40 - 98.03 (I prefer the higher) and the Wave (iii) between the 198.4% - 238.2% at 95.59 - 96.75 (again I prefer the higher).
Overall these projections lower would take the Wave (v) into the broad 93 - 94 area.

Any earlier break above the 100.50-70 pivot area would risk gains back to the 103.73 high and then maybe it will go to 105.28... I do find that hard seeing how far we have dropped though...

RATIO TABLE


Good trading
Ian Copsey



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Good morning everyone. Yesteday’s forecasts went in our direction for the most part. *We had some slow pull backs & some strong quick moves yesterday. Today the US Dollar pairs are in Sync. Expecting US Dollar to weaken during the course of the day, we may see some strength on the onset, but will loose steam later on. Mixed sentiments on Japanese Yen. I’m adding two hedged pairs to offset the trading risk today. Happy trading everyone!!

Forecasts OutlookUS Dollar : Weak
Today we're expecting the EURUSD to proceed Long above the barrier levels of 1.30041 and 1.30318.

Fundamental Watch- Cash Rate
- RBA Rate Statement
- Construction PMI
- Trade Balance
- Trade Balance
- GDP q/q





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Bullion Round Up

After last month rally, the dollar index started the week with a sell off and currently retesting support at the pivot level of 83.00. A break below that level could increase selling pressure and the index may retrace lower to 82.50 and 82.25 areas. However, the uptrend is still intact and dip buyers are waiting to jump in to boost a higher dollar index after an encouraging economic data. A better than expected US consumer sentiment and Chicago PMI gave the dollar enough boost and sent gold lower. US equities are showing a resilient strength with minor pullback despite talks of tapering in the coming months. Bad economic data from the US boost equity price as the Fed will continue the quantitative easing programme while good data could see minor corrections but the general trend is still up.

Gold prices are affected by the strong dollar index, strong rally in global equities, a strong decline in safe haven demand and falling inflation numbers. After the major sell off in April, prices have rebounded due to strong physical buying from Asian investors. This demand has dampened significantly as prices rose higher. Investors are more cautious and waiting for another round of low price to buy in again. ETFs outflow has slowed down considerably, leaving only the core investors who are holding for the long term (strong hands). An uptake on ETFs will encourage confidence in the market again. Recent CFTC report suggests that the large short positions by Hedge Funds are seeing some reduction. Instead, there were suggestions that selling could run out of steam and short covering in the coming weeks is possible. Saxo bank Mr Ole Hansen noted that “A stable price of gold during the week in question resulted in hedge funds raising their net-long position by 35 % to 48,096 contracts, the biggest gain in more than two months. The rise was triggered by new buying but also by a reduction in bearish bets which during the past couple of weeks had reached a record high.”

The risk to the downside remains but short term trading favour a higher gold price. If the situation permits, a weaker dollar index, correction in equity, increase uptake on ETFs product and with a decent physical demand may help gold retest resistance at $ 1424 area. However, our long term projection is to see this small rebound to falter and gold to retest previous low at $ 1321 or even lower.

Gold Technical

After a worse than expected US Manufacturing ISM data, dollar index fell through support level of 83.00 and retested previous resistance at 82.50. Buyers flock to gold as equities failed to rebound on bad economic data. The usually chirpy equities failed to act higher despite the fact that manufacturing ISM data shows contraction – which usually indicate that the Fed will not taper the QE programme. Given that both DYX and global equities on the back foot, gold rose higher retaking $ 1400.00 and reached resistance at $ 1416.50

Looking forward, a short term rally in a bear market is to be expected. Another bout of short selling opportunities is in the making and we would not be surprise that resistance at $ 1487 will be strong.

Resistance: $ 1423, $1437, $ 1438 Support: $ 1384, $ 1373, $ 1325

Traders Notes: Longs are taking positions at $ 1398, $ 1400, $ 1406 and $ 1414 with a stop loss ranging from $ 1373, $ 1385 and $ 1390 area. Profit target sets at $ 1424, $ 1445 and $ 1460 area. Shorts are taking positions at $ 1404.50 and $ 1420.00 with a stop loss at $ 1425 area. Profit target is sets at $ 1400 and $ 1395 area.

Bullish – target $ 1460

Bearish – target $ 1280

Silver Technical

Silver received strong bids after the bad economic data but traders were cautious that the industrial metals are reacting positively on bad economic news. It should have gone the other way (meant to be sold) but prices have moved to $ 22.97. The only disappointment is that it did not manage to cross above last week high at $ 23.12 despite a weaker dollar. Technically, it has got rooms to move higher but it could continue to trade in this range of $ 22.00 and $ 23.50. Only a break above $ 23.35 will it encourage the bears to do more short covering.

Resistance: $ 23.19, $ 23.35, $ 25.59 Support: $ 22.05, $ 19.66, $ 19.00

Traders Notes: Longs are taking positions at $ 22.40 area but with a wide stop loss at $ 21.75. Potential profit area comes in at $ 23.20 area and others are targeting higher numbers.

Bullish – Retest $ 24.50

Bullish – a potential bull run?

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The pair is trading along an downtrend.
The downtrend may be expected to continue while pair is trading below resistance level 1403, which will be followed by reaching support level 1390 and if it keeps on moving down below that level, we may expect the pair to reach support level 1380.An uptrend will start as soon, as the pair rises above resistance level 1407, which will be followed by moving up to resistance level 1418.
Supports: 1390, 1380
Resistances: 1403, 1407, 1418





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