Shamik On Gold & Silver Breakout


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A series of comments and charts.......summer technical breakout and its potential,destination and risks..

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Shamik On Gold & Silver Breakout

  1. 1. Gold & Silver charts....Dollar & Rupee prices : Monthly, Weekly , Daily..... BREAKOUT FORMATIONGold International (Monthly)Gold currently trading at $1688, confirming the break out in monthly charts. Technically RSI is at 56, thus the market is notover bought yet. Furthur uptrends above trend resistance at 1800-1825$ is anticipated as the market moves...... above thoselevels we expect resistance Poised at $1921,its previous all time highs.........
  2. 2. Silver International (Monthly)Silver is at $31.76, also confirming the break out on a monthly chart. Next target should be around 33.50 to 34.60$ range. We feelthat is comfortably achievable over the next few weeks as monthly charts are showing a RSI at 50...... .under lining strength overthe medium term.Both gold and silver are watching the QE3 and LTRO announcements from US Fed and the ECB but this only heightens the buyersanticipations as the central bank buying, Indian and Chinese festival time interest, ETF accumulation, physical market tightnessand currency debasement are all contributing to the solid fundamentals of the up-trends............This is re-inforced by buying towards the end of the calendar year ; the traditional strong period for gold and silver jewellerymarkets amongst asian buyers
  3. 3. Gold International (Weekly)Gold is comfortably trading above its 30 week simple moving average of $1639. Resistance is at $1700 and $1726.RSI is at 61 and commodity channel index at 155, so there is enough room for gold to move further on a weekly scale.
  4. 4. MCX Gold (Weekly)Chart wise it is an excellent bull pattern forming in MCX gold. Thanks to the recent past weakness in INR vis-avis the us dollar.. .The price is still trading within the flag pattern and the upside trend line resistance at 31800, above that level, technicallyit can be a free run for MCX gold.7 week RSI is at 77, looks slightly over bought, thus a correction is anticipated before the rally catches fire and the next levelof price highs are set....
  5. 5. Silver International (Weekly)Silver is also trading much higher than its 30 week simple moving average of $30.25. Next target hould be $33. Silver 7 week RSIis at 75, which is slightly over bought. We expect that amidst the rallies we will have the odd healthy corrections before the price could reach $36-40$ mark.
  6. 6. MCX Silver (Weekly)MCX silver broke the triangle pattern made over the past 12 months and is trading much higher than its trend line resistance of55000. Currently silver is trading above 59000. Next target could be 62000 -63,000 , but the weekly 7 RSI is at 77, thus correctionswill pause the rallies...
  7. 7. Gold International (Daily)On the daily chart, Gold is trading well above its 200 simple moving average of $1643. thus a break out is confirmed and nexttarget could be $1700 to $1726 range . Support is at $1640 and $1620.Gold 14 day RSI is currently neutral but uptrending....
  8. 8. Silver International (Daily)On a daily chart, silver broke through the upside trend line resistance and is trading above $32 currently....Next target will be $33 – 34.60$ ... the 14 day RSI is at 78, a bit over bought, thus corrections could be in theoffing from time to timeamidst the rallies......On a long term basis, silver looks very bullish !!
  9. 9. MCX Gold and Silver (Daily)Both Gold and silver on a daily chart in dollar terms have moved recently above their 200 day simple moving averagesIn the daily chart, gold is still trading within the upside triangle in rupee terms , but silver has broken above that level, thussilver looks more bullish than gold.According to RSI (14day) analysis, locally Gold is at 83 and silver at 84 but internationally gold 14 daily RSI is at 62 but silver at78, silver looks a tad more overbought than gold right now …….but one needs to be cautious as silver moves in a volatile fashion....
  10. 10. USD INR (Weekly)
  11. 11. USD INR (Daily)Currently USD INR is trading within a tight range between 54.70 and 56.20. A break out on either side will be decisive.RSI on daily basis is at a neutral zone....currently and the above mentioned analysis for gold and silver prices in MCX in rupee termsis assuming that USD INR will remain range bound ; However, Any drastic change in USD - INR will cause major changes in MCXgold and silver valuation.
  12. 12. 25 DELTA 3 MONTH RISK REVERSAL:Difference in Implied volatility between 25 delta Call Option and Put option, for 3 months. (white line) & USD/INR spot (orange line)Risk reversal is indicating market remains underweight on USD, in fact tad long in INR. Historically, the current levels of RR has co-incided with an upward spike in USD. Hence, it can be concluded that market has less appetite for negative news at current levels.We anticipate that the summer lull during August and Sept shall come to an end soon .....with the options delta pricing a market biastowards the Rupee, we see thatA fall below 54.80/- close basis on the spot can take us towards 54 ; but the market could be surprised if the dollar rallies........Anydrastic change in USD - INR range established shall will cause major changes as we anticipate a move of over 3-4% or 1.50/- to 2.50/-rsper dollar
  13. 13. “The only source of knowledge is experience” Albert EinsteinShamik Bhose < Executive Director > Commodity & Currency & Interest rate futures Markets; Microsec Commerze LimitedArchan Singha < senior dealer & commodity Analyst >DISCLAIMER AND PRIVILEGE NOTICE : This e-mail and any files transmitted with it contain confidential, copyright, proprietary and legallyprivileged information. It should not be used by anyone who is not the original intended recipient. Any use, distribution, copying or disclosure byany other person is strictly prohibited. If you receive this transmission in error, please notify the sender by reply email and then destroy themessage. Opinions, conclusions and other information in this message that do not relate to official business of the writer or associates / groupshall be understood to be neither given nor endorsed by us.. Internet communications cannot be guaranteed to be timely, Secure, error or virus-free. The sender does not accept liability for any errors or omissions