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Wednesday, June 1, 2011

Trend for the 1st of June 2011

Rumors about new mines of platinum

Markets were pretty wild today. A lot of currencies and precious metals developed sharp daily trends. Let me start from metals. Most probably you have seen a collapse in silver today. What do you think the move down was based on? Personally I heard a rumor that new platinum mine was found in ZAR. Well, I do not really believe that. I think it’s just big guys trying to manipulate the market and push the price of the commodity where they want to see it short term. It could be a good opportunity for them to buy it at much better prices. 

My bullish expectations for silver

I still hold to my bullish position towards silver and not going to change it as long as printing of money does not cease. I do not believe it will happen very soon and I do believe that we will see another wave of crisis. When that is over, silver will collapse. At the moment I expect the commodity to find support around 33 dollar per ounce level. It sits on intermediary support now (36.30), but I am not really sure if the level will hold this week. Sell stop orders could be placed below the support if one is a day trader and long orders can be taken now if one is a long term investor. However, if you are taking longs now you have to place stops far away, because nobody can guarantee that 33.00 level will hold. So, do not risk more than you can afford to lose. 

Pound collapses

Another thing which I guess you have noticed today was collapse of British pound. What could be the causes of it and could you have traded pound pairs profitably? Yes. If you follow economic news releases you knew that there was a piece of news scheduled to come from Great Britain at 8:30 GMT (Mortgage Approvals and Purchasing Manager Index Manufacturing). The data is of medium importance, but as you can see it created large pound liquidation today. Both gbp/usd and gbp/jpy collapsed. 

Gbp/usd near previous resistance

If you look at gbp/usd you will see that it is very close to its previous resistance 1.6300 level (now support). I believe the support should hold at least for a few sessions. There is some data of medium importance from Britain tomorrow at 8:30 (Purchasing Manager Index Construction). Today you saw what data of medium importance can do. So, be careful and don’t have open positions at the time the news is released but be ready to play with stop orders to go in the direction of the market when news is finally released. The short term trend for pound is down for it has been going down for two days now. This could change tomorrow. However, the strategy remains simple: sell on rallies near resistance levels. Previous support levels should act as resistance now. RSI overbought levels on 15 minute chart and 123 reversal patterns should help you to identify entry levels. 

Let’s wait and see what tomorrow brings. 

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Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.