Comex gold futures edged lower on Thursday from a near three-week low in the previous session, supported by softer US economic data and a fall in Asian shares following a report that President Donald Trump was being probed for possible obstruction of justice.

Comex gold futures have moved perfectly in line with our expectations so far. Prices found support at about $1,265 and pushed higher, but could not find follow-through momentum around $1,280 . As prices manage to close above $1,272, more upside towards $1,285 can be seen. The technical picture is turning neutral to bearish in the short term and support levels around $1,245 followed by $1,210 are expected to be tested in the coming sessions. Strong resistance will be seen at $1,270-75 now. An important trend line support at $1,220-22 could hold supports in between. Chances exist for an extension even to $1,195, or even lower to $1,177 a potential target area in the coming months. Prices are expected to edge lower towards supports mentioned above. The trigger for such a decline below $1,258 could hint at a resumption of the downtrend. The bullish view we have had so far seems to be slowly diminishing and it appears now that more downside can be expected.

Reading the wave counts

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 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 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. If the current decline as a whole from $1,920 can be considered as a fourth wave, the fifth wave could begin and cross $1,700 in the long term. But the failure to follow through above $1,355 has dashed any hopes of any impulsive up-move. As prices have broken certain important supports and show weakness targeting $975, we are tilted towards looking 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 still above the zero line of the indicator again, indicating that bullishness is intact. Only a cross-over again below the zero line could hint at a reversal in trend to bearish.

Therefore, sell Comex gold below $1,256 with stop-loss at $1,277 targeting $1,245 followed by $1,220.

Supports are at $1,245, $1,220 & $1,210 and Resistances are at $1,277, 1,295 & 1,305.

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

Related Topics