Gnanasekaar T

Buy Comex gold at $1,265-70/ounce

Gnanasekaar T | Updated on January 09, 2018


Comex gold futures hit the highest levels in two months on Thursday as the United States and North Korea exchanged more threats, prompting investors to buy bullion as a safe haven asset.

Comex gold futures are moving in line with our expectations. As mentioned in the previous update, we expect prices to edge towards $1,277-78, a potential target area. As expected, prices found support in the $1,245-55 band and edged higher.

Near-term resistances have been broken and prices are on their way towards $1,295-1,300 where strong resistances kick in. As explained in the previous update, the trigger for a rise could be on a close above $1,272, which could hint at a revival in upward momentum.

The $1,253-55 resistance was a long-term resistance level and as it was taken out, a bullish trend has emerged. A possibility exists for this move to extend to $1,335-37, an important medium-term resistance level. Dips to $1,275 followed by $1,255 are seen being supportive in the coming sessions. The favoured view expects prices to edge higher towards the resistances mentioned above.

Wave counts

It is most likely that the fall from the all-time highs at $1,925 to the recent low of $1,088 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.

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 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 upward move. As prices have broken certain important supports and shown weakness targeting $975, we are inclined to look at this as a corrective wave C.

RSI is in the neutral zone now, indicating that it is neither overbought nor oversold. 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 bullishness.

Therefore, Buy Comex gold on dips to $1,265-70 with a stop loss at $1,252 targeting $1,295, followed by $1,335.

Supports are at $1,265, $1,253 and $1,240 and resistances are at $1,295, 1,305 and 1,335.

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

Published on August 10, 2017

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