The direction of the December Comex gold futures contract on Tuesday is likely to be determined by trader reaction to the main 50% level at $1889.70.
Gold futures are trading nearly flat early Tuesday, basically mirroring the price action of the U.S. Dollar index. Volume is a little on the light side despite a strong performance the previous sessions. The low volume and volatility could be a function of dampened expectations of a timely fiscal stimulus deal and general uncertainty ahead of Tuesday evening’s Presidential debate.
At 08:27 GMT, December Comex gold futures are trading $1887.40, up $5.10 or 0.27%.
The main trend is down according to the daily swing chart, however, momentum is trending higher following the confirmation of the closing price reversal bottom on September 24.
A trade through $1851.00 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a move through the last swing top at $1983.80.
The main range is $1690.10 to $2089.20. Its retracement zone is $1889.70 to $1842.60. This zone is controlling the near-term direction of the market. Gold traders have been trying to form a support base inside this zone the last four sessions.
The minor range is $1983.80 to $1851.00. Its 50% level at $1917.40 is the next upside target.
The short-term range is $2089.20 to $1851.00. Taking out the first pivot could drive the market into its retracement zone at $1970.10 to $1998.20.
Based on the early price action, the direction of the December Comex gold futures contract on Tuesday is likely to be determined by trader reaction to the main 50% level at $1889.70.
A sustained move over $1889.70 will indicate the buying is getting stronger. This could trigger a rally into the minor 50% level at $1917.40.
A sustained move under $1889.70 will signal the presence of sellers. The first minor target is $1871.70. This is followed by the support cluster at $1851.00 to $1842.60.
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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.