Maintain long positions as the commodity is attempting a crucial breakout. After it experienced a relatively sharp upward move from the low of USD1,045.30 on 3 Dec 2015 to a high of USD1,380.90 on 6 Jul 2016, the precious metal has been trading in a consolidation phase over the past three years, in a possible “Triangle” formation. The latest session witnessed the first attempt to break away from the said consolidation formation. Price actions over the coming sessions would be critical, as a firm breakout would likely signal the resumption of a longterm upward move. Failure to do so, ie with price rejection from the upper-bound of the “Triangle” formation, could mean an extension of the multi-year consolidation phase. At this juncture, we maintain our positive trading bias.

In the absence of a clear price rejection signal from the upper-bound of the “Triangle” formation, we continue to recommend that traders stay in long positions. We opened these positions at USD1,333.60, which was the closing level of 5 Jun. For risk management purposes, a stop-loss can now be placed at the breakeven level.

The immediate support is set at USD1,300, a round figure. This is followed by USD1,267.90, or the low of 23 Apr. On the other hand, the immediate resistance is set at the USD1,349.80 threshold, ie the high of 20 Feb. This is followed by USD1,380.90, which was the high of 6 Jul 2016.

Source: RHB Securities Research - 17 Jun 2019