Technical Analysis

If gold touches $1,267-70/oz, sell it

Gnanasekaar T | Updated on January 09, 2018 Published on December 21, 2017

Comex gold futures edged higher on Thursday, supported by weakness in stocks and a retreat in the dollar as markets awaited the signing of a new US tax bill. Profit-booking in equities ahead of the year-end and passing of the tax legislation seem to be supporting gold prices for now.

Comex gold futures moved higher as expected. As mentioned in the previous update, a good bounce to $1,267-75 levels looks likely. But we still need to see if it can sustain. As of now, it looks unlikely if the prices can sustain and push higher from there.

The $1,267-70 level, which was earlier a strong support, will tend to act as a resistance now. Only a close above $1,283 could suddenly open the upside again to $1,295/97. Direct fall below $1,235, on the other hand, could revive bearish expectations for $1,206/10in the coming sessions.

Wave counts: It is most likely that the fall from the record $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 or a complete correction of A-B-C ending with this decline. Subsequently, 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 shows weakness targeting $1,100 . But a sustained move above $1,200 has once again revived bullish hopes and will make the necessary adjustments to the wave counts, as the prices break key resistance above.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator again, indicating a bearish reversal. Only a cross over again above the zero line could hint at a reversal in trend to bullish.

Therefore, sell Comex gold around $1,267-70 with the stop-loss at $1,278 targeting $1,255 followed by $1,235.

Supports are at $1,255, 1,235 and 1,210. Resistances are at $1,267, 1,278 and 1,297.

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

Published on December 21, 2017
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