Comex gold futures were higher on Thursday as the metal bounced back above $1,100 an ounce from the previous session’s five-year low. Comex gold futures are moving perfectly in line with our expectations.
As mentioned earlier, the bigger picture suggests downside pressure in the coming weeks. A close below $1,160-65 an ounce has opened the downside for gold futures. Resistances will be seen at $1,115-20 levels followed by $1,140-45 levels now. Pullbacks to the above mentioned levels could come under pressure and prices could eventually retest the lows at $1,085 levels or even lower to $1,045.
The question is, can prices reverse from above mentioned levels? Technically, an equality target is seen at $1,025 and another important one comes at $925. However, it does not mean that the above mentioned equality targets might necessarily be tested. Our favoured view expects the confluence point near $1,025-45 range to hold any attempts to decline and the prices moving up in a correction from there. However, only a convincing close above $1,145 accompanied by rising volumes could revive bullish expectations of a further move higher from there again.
Coming to the wave counts, it is most likely that the fall from the record 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. We are more inclined to go with this as a favoured scenario. If prices do cross-over above $1,435, then this possibility will be confirmed. In the short-term though, prices are likely to be under pressure and could edge lower towards $1,025-45 levels.
RSI is in the over sold zone now indicating a possible upward correction in the offing. The averages in MACD are below the zero line of the indicator, indicating a bearish reversal in trend again. Only a cross over again above the zero line could hint at a bullish reversal.
Therefore, sell Comex gold on rallies to $1,125 with a stop-loss of $1,147 targeting $1,076 followed by $1,045.
Supports are at $1,095, 1,075 and 1,045. Resistances are at $1,125, 1,145 and 1,160.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.