Comex gold futures edged down on Thursday after rallying to its highest since March 2014 a day earlier on the back of concerns about Britain’s vote to exit the European Union, though strength in stocks and the dollar limited gains.

Comex gold futures moved perfectly in line with our expectations. As mentioned earlier, we expected a break higher in the range and a test of $1,345-55 an ounce looking likely in the coming days followed by $1,378-85 levels where some resistance can be noted.

Prices have reached the near-term target of $1,375 levels. Any corrective dips could find supports around $1,345 followed by $1,320-25 levels now. Such corrective dips are needed for this healthy uptrend to sustain and continue pushing higher. The big picture has clearly signalled a reversal in trend to bullish before it was languishing in the $1,200 range earlier.

A potential target lies at $1,450-55 levels being an equality target. Fall below $1305 could postpone the bullishness and such a fall could see prices testing $1,275 levels and then edging higher from there again.

Favoured view still expects prices to be find support around the above mentioned supports and then edge higher towards important resistances around $1,400 followed by $1,435-50 levels.

Wave counts: It is most likely that the fall from the record high 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. Subsequently, 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 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 certain important resistances and shows impulsive tendencies, we will now stick with the above count. And as mentioned earlier, once prices reach $1,025-45 levels we will look for any signs of reversal. There are signs of a turnaround, and prices convincingly risen in volumes and closed above $1,300 levels, which further reaffirms our wave count.

RSI is in the overbought zone now indicating a possible downside correction in the offing. The averages in MACD have gone above the zero line of the indicator again, indicating a bullish reversal. Only a cross over again below the zero line could hint at a reversal in trend to bearish.

Therefore, buy Comex gold on dips to $1,340-45 with stop-loss at $1,319 targeting $1,425.

Supports are at $1,345, 1,320 and 1,305. Resistances are at $1,378, 1,435 and 1,455.

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

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