XULF Report
It feels like the bulls and bears are on a see-saw with the $1400 mark as the centre point at present making it really difficult to execute position trades. Therefore shorter term intra-day trades are more suitable until the market at large becomes more comfortable with the fact the Fed is ready to taper bond purchases and that it may be soon. It could be a volatile day for gold and equities as Prime Minister Shinzo Abe is scheduled to speak before a press conference outlining more of his growth plans including encouragement to pension funds to invest in more overseas assets which could lift equities and put pressure on gold. We also have Spanish and Italian Services PMI in the afternoon and this evening at 20:15 there is the ADP Non-Farms which is the private sector’s job report for May and is an important precursor to the all-encompassing Non-Farms this Friday.
Always use stop losses especially during potentially volatile days like today. Any trends at present seemed to be short lived so there are scalping opportunities when price either spikes or drops at a fast rate and becomes overbought or oversold. Here the RSI and the Bollinger Bands on the 15 minute chart shows the market is overbought therefore consider a short with a tight stop if a bearish candlestick prints. A stop loss above this morning’s high is an appropriate level. A break higher from this level will indicate further price gains in the short term.
The medium term bullish trendline on the 4 hour chart was pierced last night but as price closed back above the trendline it is arguable that the trend is still intact. Although it is worth reiterating that due to the volatility any trendlines may not be reliable. Medium term, due to price forming a triangle shown by the blue descending line and the medium term bullish trendline, could be determined by a breakout probably caused by one or more of today’s headline news.
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