Comex Gold Futures (GC) Technical Analysis – May 4, 2016 Forecast

June Comex Gold futures weakened on Tuesday as the U.S. Dollar strengthened against all major currencies. Gold was also pressured by the comments from two Fed officials who talked up the possibility of interest rate hikes this year. Profit-taking after a recent rally to a 15-month high also weighed on the market.

Technically, the main trend is up, but the two-day break from the recent high indicates that momentum may be shifting to the downside. A trade through $1306.00 will signal a resumption of the uptrend. The market is not in a position to turn the main trend to down, but we could be looking at a near-term correction into the nearest retracement zone.

The main range is $1225.40 to $1306.00. Its retracement zone is $1265.70 to $1256.20. This zone is the primary downside objective. Since the main trend is up, buyers may come in on a test of this zone.

Based on the close at $1291.80 and the earlier price action, the direction of the market today is likely to be determined by trader reaction to the former top at $1287.80.

A sustained move under this angle will indicate the presence of sellers. It will also mean that the last rally to $1306.00 was likely triggered by short-covering rather than new buying.

The first target is an uptrending angle at $1281.40. This angle is the trigger point for a steep sell-off with the next target come in at $1265.70. Taking out this level will mean the selling is getting stronger with additional targets coming in at $1256.20 and $1253.40.

The inability to break through $1281.40 will indicate that buyers are coming in to defend the trend. Overtaking $1287.80 will indicate the buying is getting stronger. Taking out the steep downtrending angle at $1290.00 could trigger a breakout to the upside.

A move through $1290.00 could generate enough upside potential to trigger a rally into a pair of angles at $1298.00 and $1302.00. The latter is the last potential resistance angle before the $1306.00 main top.

Based on the current price at $1282.30, watch the price action and read the order flow at $1281.40. Look for an upside bias to begin if this angle holds as support. Look for a downside bias to start and a possible acceleration to the downside if this angle fails as support.