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February Gold Monthly Technical Analysis for December 2016

By:
James Hyerczyk
Updated: Dec 7, 2016, 07:54 UTC

February Comex Gold futures closed sharply lower in November as long-term investors aggressively shed positions in reaction to rapidly rising Treasury

comex-gold-bars

February Comex Gold futures closed sharply lower in November as long-term investors aggressively shed positions in reaction to rapidly rising Treasury yields, a rally by the U.S. Dollar Index to its highest level since 2003 and new all-time highs in the three major U.S. stock indexes.

The February futures contract closed the month at $1173.90, down $103.00 or -8.07%.

Prices are expected to continue to tumble in December as long as the Dollar and the major indexes remain strong.

Technical Analysis

The main trend is up according to the monthly swing chart. However, momentum has been down since the $1387.10 main top was formed in July.

The main range is $1055.20 to $1387.10. Its retracement zone is $1221.20 to $1182.00. This zone is controlling the longer-term direction of the market. The market closed under this zone in November, putting it in a bearish position to start the new month.

monthly-comex-gold
Monthly February Comex Gold

Forecast

Based on November’s close at $1173.90, the direction of the gold market in December will be determined by trader reaction to the major Fibonacci level at $1182.00.

A sustained move under $1182.00 will signal the presence of sellers. This could create enough downside momentum to challenge the nearest uptrending angle at $1151.20. If this angle fails as support, the market could plunge further into the next uptrending angle at $1103.20. This is the last major support angle before the $1055.20 main bottom.

A sustained move over $1182.00 will indicate the presence of buyers. This could trigger a strong short-covering rally with the next objectives the major 50% level at $1221.20 and the downtrending angle at $1227.10.

Watch the price action and read the order flow at $1182.00 all month. Trader reaction to this level will tell us if buyers have returned, or if sellers are increasing their downside pressure.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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