Commodities

Sell gold if it touches $1,045/oz

Gnanasekaar T | Updated on January 22, 2018 Published on December 17, 2015


Comex gold futures slipped lower on Thursday giving up some of the overnight gains as the dollar surged after the Federal Reserve hiked US interest rate for the first time in nearly eight years. Comex gold futures are moving in line with our expectations.

As mentioned in the previous update, caution needs to be exercised on getting excessively bearish. We also favoured the break higher above the current consolidation range of $1,065-80. But, the consolidation still continues and our favoured view still continues to expect a move higher. However, unexpected decline below $1,040 could diminish our bullish hopes and revive bearish expectations for a test of $1,020 or even lower.

While supports around $1,055-60 holds, we favour prices to edge higher towards resistances around $1,095-97 followed by $1,120 levels. However, below $1,045, more weakness is expected towards $1,020 or even lower to $975.

As mentioned in the previous update, chances of a reversal are also quite high too and a trigger for such a move would be a close above $1,090. But, now, it looks like such short-term rallies could be short-lived and a clear reversal is still some way ahead.

We will take a look at the wave counts now and understand the possible scenarios that can unfold going forward. It is most likely that the fall from the record $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. Subsequently, to this decline, a corrective wave “B” could unfold with targets near $1,255 or even higher. After that, a wave “C” could begin lower again.

Alternatively, we can also expect wave “B” to extend to $1,476 levels. 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.

As prices have broken the key $1,140, we will now abandon this count. And as mentioned earlier, in the short-term though, prices are likely to be under pressure and could edge lower towards $1,025-45 levels.

Once prices reach these levels mentioned above or any signs of a reversal, we can take a fresh directional call. But, so far there are no such signals.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator again, indicating bearishness to be intact. Only a cross over again above the zero line could hint at a reversal in trend to bullish.

Therefore, sell Comex gold below $1,045 with a stop-loss of $1,065 targeting $1,020 followed by $985 .

Supports are at $1,045, 1,020 and 975. Resistances are at $1,085, 1,105 and 1,120.

The writer is the Director of Commtrendz Research. There is risk of loss in trading.

Published on December 17, 2015

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