TECHNICAL ANALYSIS. Sell Comex gold if it touches $1,077-1,080 an ounce

Comex gold futures, are near its lowest in nearly six years on Thursday, as the dollar held at multi-month highs after US economic data reinforced expectations of an interest rate rise this year. Comex gold futures moved in line with our expectations.

As mentioned in the previous update prices, do not exhibit a clear bottom yet, even though it has pulled back from recent lows of $1,064. As cautioned earlier, failure to follow-through higher above $1,087 could put prices once again at the danger of heading lower towards $1,045 levels.

Resistance was seen exactly from there and prices have been in a consolidation mode. Prices could breakout on either side of the range. As per the technical structure, prices are expected to edge lower towards $1,045 levels or even lower. Only an unexpected rise above $1,090 could tone down the bearish picture in the medium-term. Such a move could see prices testing resistances at $1,100 followed by $1,120 levels, which is not our favoured view. Favoured view expects prices to dip lower to $1,045 or even lower to $1,020-25 levels while $1,090 caps upside attempts.

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 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. Also, as mentioned earlier, in the short-term, 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 oversold zone now indicating that a possible upward correction can be seen. The averages in MACD are below the zero line of the indicator again, indicating a bearish reversal. Only a cross over again above the zero line could hint at a reversal in trend to bullish.

Therefore, Sell Comex gold near $1,077-80 stop loss $1,090 targeting $1,055 followed by $1,030.

Supports are at $1,063, $ 1,045 & $1,030 and Resistances are at $1,085, 1,105 & 1,120.

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

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