Comex Gold Futures (GC) Technical Analysis – October 26, 2016 Forecast

December Comex Gold futures are trading lower after failing to follow-through to the upside following Tuesday’s strong rally. The market is acting pretty strange and should be watched carefully, if long, because the price action suggests there may be a “stopper” controlling the upside.

The short-term fundamentals are bullish with the dollar weakening along with equity prices. Additionally, there is also strong holiday demand coming in from China. On Tuesday, the market even took out the swing top at $1275.90, but the move never gained traction, stopping at $1277.50 before selling off into today’s session.

Technical Analysis

The main trend is up. It turned up on a trade through $1275.90 on Tuesday. The new swing bottom is $1260.10. A trade through this level will turn the main trend to down.

The major range is $1207.00 to $1384.40. Its retracement zone is $1295.70 to $1274.80. Although the market has traded on the weak side of this zone for several weeks, it is currently straddling the lower or Fibonacci level at $1274.80, indicating that buyers are trying to work their way back up.

The intermediate range is $1347.80 to $1243.20. If buyers can overcome $1274.80 then this may generate enough upside momentum to challenge its retracement zone at $1295.50 to $1307.80.

On the downside, pivot levels come in at $1268.80 and $1260.30.

Forecast

Based on the current price at $1271.60 and the earlier price action, the direction of gold today is likely to be determined by trader reaction to the major Fib level at $1274.80.

A sustained move under $1274.80 will indicate the presence of sellers. The first target is the short-term pivot at $1268.80. The next target under this level is a price cluster formed by $1260.30, $1260.10 and $1259.00. Look for an acceleration into $1249.60 and $1243.20 if $1259.00 fails as support.

A sustained move over $1274.80 will signal the presence of buyers. This is followed by yesterday’s high at $1277.50.

There is still a lot of room to the upside with $1295.70 the next major target. However, the market needs some strong buying volume to get this market going.

Watch the price action and read the order flow at $1274.80 and $1268.80 all day. Trader reaction to these two prices are likely to tell us if the buyers or the sellers are in control.