The MCX-gold futures contract is in a strong uptrend ever since it began trading in 2003. The contract peaked at ₹35,074 for 10 gm in August 2013 and had tumbled 19 per cent in just two months to ₹28,350 in October.

However, the contract has been ruling stable in a broad range between ₹27,800 and ₹31,500 since then. Within this range, prices are headed higher, providing an opportunity for traders to enter long positions.

Global gold prices are looking bullish, which could aid the rise in MCX gold. There is a possibility of an inverted head shoulder in the making. The recent bounce from the low of $1,277.7/ounce could be the formation of the right shoulder of this pattern.

A breakout above $1,400 will confirm this pattern and take the price higher to $1,600 in the coming months.

Short-term view: The short-term view is bullish for the MCX-gold futures contract. There is an inverted head and shoulder pattern on the 4-hr chart. The contract made a high of ₹28,986 on Monday and is reversing down now.

However, the probability is high for the contract to reverse higher again from the support in ₹28,300-28,000 zone. Even if the contract declines below ₹28,300, the extent of fall could be limited to ₹28,000.

So, short-term traders can go long now with a stop-loss at ₹27,950. The target will be ₹29,400 which is the target level of the inverted head and shoulder pattern.

Medium-term view: The MCX-gold is trading in a sideways range of ₹27,800 and ₹31,500 since September 2013. Within this range, the contract has tested the lower band of the range in the first week of April and is moving higher since then.

Key support for the contract is now at ₹27,700 and as long as the contract trades above this level the probability is high for it to rise towards ₹31,500; the upper end of the range.

Medium-term investors can go long with a stop-loss at ₹27,650 for the target of ₹30,800.

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