Comex Gold (GC) Futures Technical Analysis – March 19, 2014 Forecast

April Comex Gold futures are called lower this morning after confirming Monday’s closing price reversal top. The first objective of the $1319.30 to $1392.60 range has already been reached at $1355.95 to $1347.30. Although the market closed above the upper or 50% level at $1355.95, the downside pressure may be strong enough to challenge the lower or 61.8% level at $1347.30.

Downtrending resistance is at $1360.60 today. Holding below this angle will mean the market is falling at a rate of greater than $16.00 per day.  Crossing over to the bullish side of this angle could trigger a rally to $1376.60.

The key level to watch is $1347.30 because the daily chart indicates that a break under this angle with conviction could trigger a steep decline to $1335.50. This is a major long-term Fibonacci level so taking out this level will send out a bearish signal. The corresponding 50% level is at $1306.25 so bullish investors will have to step up and defend $1335.50 or gold will move into a position to plunge sharply lower.

It’s hard to say what effect the Fed statement will have on gold since the main event driving the price action this week is the lack of violence after the Crimean vote to secede from Ukraine. Theoretically, the action in the U.S. Dollar should drive gold. A weaker dollar would be bullish for gold, a stronger dollar bearish. However, traders haven’t been reacting much to this correlation much lately.

One can also build a case that bearish news from the Fed could trigger a break in equities. This could cause short-covering in gold because long hedgers are likely to return. This is the best scenario to watch for since gold is nearing major support levels.

Watch for expanded volatility after the Fed announcement at 2:00 p.m. ET and have a plan to protect yourself if $1335.50 is violated. Short-sellers may decide to take out this price with conviction.