Comments
Gold held steady on Thursday as the dollar weakened after minutes from a US Federal Reserve meeting suggested that the central bank could take a more cautious approach to interest rate increases.
A broad consolidation is underway between $1,245-1,265. Ideally, we expect the price to inch towards $1,283-85 in the coming sessions post the consolidation. Once, the price manages to close above $1,272, a further upside towards $1,285 can be seen.
The favoured view expects prices to push higher towards the resistances mentioned above. A failure to cross $1,285 could once again result in loss of faith for gold. Only an unexpected decline below $1,230 could hint at a resumption of the downtrend.
Such a move could take prices lower towards $1,195, which is not our favoured view now. Price structures are supportive of an up move in the short-term while supports hold.
Wave countsIt is most likely that the fall from the all-time highs at $1,925 to the recent low of $1,088 so far, was either a possible corrective wave A, with a possibility to even extend towards $1,025-30 levels or a complete correction of A-B-C ending with this decline.
Subsequent to this decline, a corrective wave B could unfold with targets near $1,375 or even higher. After that, a wave C could begin lower again.
Alternatively, we can also expect wave B to extend to $1,476. If the current decline as a whole from $1,920 can be considered as a fourth wave, then the fifth wave could begin and cross $1,700 in the long-term. But, failure to follow-through above $1,355 has dashed any hopes of any impulsive up move.
As prices have broken certain important supports and shows weakness targeting $975, we are inclined to look at this as a corrective wave C in progress.
RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are below the zero line of the indicator again, indicating a bearish reversal. Only a crossover again above the zero line could hint at a reversal in trend to bullish.
Therefore, Buy Comex gold around $1,245-50 with stop loss at $1,237 targeting $1,285.
Supports are at $1,245, $1,231 & $ 1,220 and resistances are at $1,274, 1,285 & 1,305.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.