Gnanasekaar T

Buy gold on dips to $1,320-25/oz

Gnanasekaar T | Updated on January 16, 2018


Comex gold futures fell marginally as the US Federal Reserve signalled an interest rate increase by the end of the year after policy was kept unchanged in September, as expected.

Bullion gained late on Wednesday as the Fed stayed putt on interest rates in the world’s biggest economy.

Comex gold futures moved perfectly in line with our expectations. As mentioned earlier, our favoured view expected prices to find support around the $1,305-10 per ounce levels and then edge higher. A potential target still lies around $1,450-55, being an equality target in the coming months.

Once above the near-term resistance at $1,345-47 further resistance is seen at $1,365-75 now. Once above here, prices could push higher towards $1,400 levels or even higher in the coming sessions.

Supports are now seen at $1,325 followed by $1,310 levels. A direct fall below $1,310 could postpone the bullishness again and such a fall could see prices testing $1,288-90 but, we still feel they could once again find good support there and edge higher again. Failure to hold the support here could dent the prospects of the uptrend.

The price structures look positive with a broad consolidation still under way and since the important support at $1,305-10 has held once again for the fourth time in the last six months could discourage any bearish bets.

The favoured view expects prices to find support around the $1,320-25 levels and then edge higher towards important resistances around $1,365 followed by $1,435-50.

Wave counts: It is most likely that the fall from the record $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.

As prices have broken certain important resistances and shows impulsive tendencies, we will stick with the above count. And as mentioned earlier, once prices reach $1,025-45 levels, we will look for any signs of reversal. There are signs of a turnaround, and prices have convincingly risen in volumes and closed above $1,300, which further reaffirms our wave count.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD have gone below the zero line of the indicator again, indicating a bearish reversal. Only a crossover again above the zero line could hint at a reversal in the trend to bearishness.

Therefore, buy Comex gold on dips to $1,320-25 with a stop-loss at $1,304, targeting $1,345 followed by 1,395. Supports are at $1,320, 1,305 and 1,288. Resistances are at $1,345, 1,365 and 1,400.

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

Published on September 22, 2016

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