Gnanasekaar T

Buy Comex gold futures at $1,270/ounce

Gnanasekaar T | Updated on January 15, 2018


Comex gold futures rallied to a five-month high on Thursday, on track for its best week since June, after the previous day's comments by US President Donald Trump on the strength of the dollar knocked the currency half a percent lower, boosting gold in turn.

Comex gold futures moved perfectly in line with our expectations.

As mentioned earlier, chances exit for a push higher to $1,290-95, prices could pause and consolidate in a broad range between $1,240-1,260. After a consolidation and a close above $1,265 has opened the upside for the next move to the important resistance at $1,290-95. Chances exist for the prices to be even stretching higher to $1,305 , where it is expected to repulse any attempts to rise further. A close above $1,305 is needed for the rally to extend further to $1,338-45 . Only an unexpected dip below $1,262 might hint at the possibility of failure of this view.

Next supports would be near $1,242 followed by $1,220-25. Favoured view expects prices to push higher towards $1,305, while supports around $1,270-75 holds attempts to dips further.

Only an unexpected fall below $1,224 could hint at weakness once again in the bigger picture and that it has turned bearish again.

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 $1,375 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 has broken certain important supports and shows weakness targeting $975 , we are tilted towards looking at this as a corrective wave "C" in progress. RSI is in the overbought zone now indicating that a possible downward correction is in the offing.

The averages in MACD are 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 bullish.

Therefore, Buy Comex gold around $1,270 with stop loss at $1,261 targeting $1,305 followed by $1,330.

Supports are at $1,275, $1,262 & $ 1,245 and Resistances are at $1,295, 1,305 & 1,335.

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

Published on April 13, 2017

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