The tides have turned this week for Precious Metals after a stunning collapse in CPI, followed by a series of weaker economic data points. Fed fund futures are questioning the Federal Reserve's hard stance. Currently, the latest CME FedWatch tool indicates a 2% chance for the first interest rate cut in January, followed by a 35% chance in March and a 65% chance in May. The modest uptick in initial claims data helped fuel the recovery in Gold, and bargain-hunters aggressively stepped into the Silver market. The Gold/Silver ratio quickly retreated from 87:1 back down to 83:1, leaving us to wonder if this rally is for real.
Taking it to the Charts
After pressing the 50 DMA and trading down to our pocket support ($1950-$1938), Gold futures were able to stage a strong recovery, slicing through the 200 DMA. We want to carefully monitor key resistance levels at $2000 and $2020. Any breach above should trigger the next wave of short covering followed by fresh buying.
Remember that every bull market starts with a short-covering rally. Momentum studies are turning higher, with stochastics rising from oversold territory, followed by the MACD histogram, which is also beginning to rise. We see value in adding short-term options above the breakout point of $2020 and adding micro futures on any weakness to our pocket support. The technicals leave you with a clear line in the sand below $1938 for risk management purposes.
www.tradingview.com/cme/
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Taking it to the Charts
After pressing the 50 DMA and trading down to our pocket support ($1950-$1938), Gold futures were able to stage a strong recovery, slicing through the 200 DMA. We want to carefully monitor key resistance levels at $2000 and $2020. Any breach above should trigger the next wave of short covering followed by fresh buying.
Remember that every bull market starts with a short-covering rally. Momentum studies are turning higher, with stochastics rising from oversold territory, followed by the MACD histogram, which is also beginning to rise. We see value in adding short-term options above the breakout point of $2020 and adding micro futures on any weakness to our pocket support. The technicals leave you with a clear line in the sand below $1938 for risk management purposes.
www.tradingview.com/cme/
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.