Gnanasekaar T

Buy Comex gold at $1,280/oz

Gnanasekaar T | Updated on January 12, 2018 Published on June 08, 2017


Comex gold futures edged lower on Thursday as investors stayed on the sidelines waiting for the outcome of the European Central Bank meeting, Britain’s national election and testimony from the former US FBI director James Comey.

Comex gold futures moved perfectly in line with our expectations so far. As mentioned earlier, as prices manage to close above $1,272, an upside towards $1,285 or even higher to $1,295/97 can be seen. Strong resistance has been seen so far at $1,295.

But, prices are consolidating once again hinting at a breather before the next up move. Chances exist for an extension to $1,305 or even to $1,330-35, a potential target area in the coming months. Strong supports are in the $1,265-70 range.

The favoured view expects prices to push towards the resistances mentioned above. A failure to cross $1,295/97 could once again result in loss of faith for gold. Only an unexpected decline below $1,258 could hint at a resumption of the downtrend.

Such a move could take prices lower towards $1,245 followed by $1,210, which is not our favoured view now. Price structures are supportive of an up move in the short-term while supports hold.

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 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.

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 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.

But, failure to follow-through above $1,355 has dashed any hopes of any impulsive up move. As prices have broken certain important supports and shown 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 have gone above the zero line of the indicator again, indicating a bullish reversal.

Only a crossover again below the zero line could hint at a reversal in trend to bearishness.

Therefore, Buy Comex gold around $1,280 with a stop-loss at $1,264 targeting $1,305 followed by $1,330. Supports are at $1,275, $1,258 and $ 1,245 and resistances are at $1,295, 1,305 and 1,330.

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

Published on June 08, 2017
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