Technical Analysis: Expect Contratrend Rallies In Most Metals

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Bear market declines are in place for nearly all the commodities except for a strong Palladium.. Kickback rallies (contratrend rallies) are in place or in progress; some already may be failing. What to watch for is a test of the lows, which may result in a further breakdown, and lower lows, or contrarily, a decline that fails to achieve the former low, thus holding at a higher level, which could suggest the potential for another rally over the weeks / months ahead.

Gold – Lack of Direction

Gold Spot price (GOLDS-1,213, see Figure 30) failed to rally beyond the 2013 downtrend, instead pulling back below the long-term uptrend as well as below the MAs, uncertain as to the next direction. The weekly momentum appears poised to roll over into another negative bias, with the monthly negative, but trying to turn positive. Sideways action may continue to baffle over the short term, but the bear market forces may not yet be over. The parameters for a trading area stand between resistance 1,300 and support 1,177-1,131. Pushing through either level would suggest the direction of the next move for Gold.



Silver Spot price (SILV-16.60) carries a pattern similar to Gold in a trading range between 18 and 15, at the 2003 uptrend. A breach of either price level should define the next directional move.


Aluminum (LA1-1809.25, see Figure 31) failed to complete the base defined now by a false breakout, and has retraced nearly to the lows of 2014. Price is below the MAs and the weekly momentum is negative and the monthly momentum is poised to turn negative again, suggesting the lows may be tested. Resistance lies at 1,885.



Copper – Contratrend Rally

The Copper Continuous Futures Contract (HG1- 271.60, see Figure 32) embarked on a contratrend rally through two resistance levels at 260 and the 2010 resistance at 270 with the next level, were it to be achieved, still at 280, possibly even 290. Were the decline to resume, support is at 260 and at the low near 241. The weekly momentum may turn positive from very negative levels to suggest the rally may continue a bit further, but the monthly momentum is still negative and falling to lower levels suggesting thereafter, there may further price risk again.



Platinum – New Low

Platinum spot price (PLAT-1,189.00) could not hold the trading range defined herein last month (see Figure 33, left) and has slipped to a new low (see arrow) suggesting the lower target at 1,100 may be forthcoming. The weekly momentum is rolling over toward another negative signal and the monthly is negative and still falling lower suggesting further risk. Resistance for a rally exists at 1,290.


Palladium – Regaining Trend

Palladium spot price (PALL-818, see Figure 33, right), the strongest of the metals we cover, has been inching up to regain the broken uptrend, and has moved up through 780, close to exceeding 820 to make it through both the uptrend and 200-day MA intersection. The weekly momentum is trying to turn positive while the monthly remains mildly negative. Overall, the pattern appears neutral, but strengthening and could stretch toward resistance at 860. A first support is at 800 followed by 755, the former 2015 low. Any reversal through these levels would suggest further attrition.



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