Maintain short positions until the correction is completed. Today, we re-asses the precious metal’s long-term price structure. After making a sharp upmove between the low of USD1,045.40 on 4 Dec 2015 and the high of USD1,380.90 on 8 Jul 2016, the commodity has been consolidating over the past 36 months in a possible “Triangle” pattern. It came near to test the upper bound of the said possible “Triangle” formation on 20 Feb with a high of USD1,349.80. Since then, it has been in the multi-week correction mode and forming a possible flag pattern. As long as the metal is not able to break out from the said flag formation, the trading bias would stay negative. If a breakout happens, the commodity would likely test the upper bound of the said possible “Triangle” formation. Until we see this, we are keeping our negative trading bias.

Given that there is no price indication to suggest the commodity’s multi-week correction mode has reached an end, we recommend traders stay in short positions, initiated at USD1,281.40, the closing level of 17 May. A stop-loss can be placed at USD1,330.80.

Immediate support is pegged at USD1,267.90, or the low of 23 Apr. This is followed by USD1,236.50, ie the low of 14 Dec 2018. Moving up, the immediate resistance is set at USD1,330.80, which was the high of 25 Mar. This is followed by USD1,349.80, or the high of 20 Feb.

Source: RHB Securities Research - 28 May 2019