Traders need to watch the price action and read the order flow on tests of the retracement zones at $1334.00 to $1341.20 and $1322.80 to $1318.30.
April Comex Gold traded steady to lower most of the session on Thursday as investors reacted to the European Central Bank’s latest monetary policy statement and concerns over a possible trade war. Traders are no preparing for Friday’s U.S. Non-Farm Payrolls report.
The main trend is down according to the daily swing chart. Wednesday’s closing price reversal top took the wind out of the sail of the four-day counter-trend rally. The chart pattern was confirmed earlier on Thursday when sellers took out yesterday’s low at $1323.00.
The main trend will change to up on a move through $1364.40. Taking out $1303.60 will signal a resumption of the downtrend.
The minor trend is also down. A trade through $1342.00 will negate the closing price reversal top and change the minor trend to up.
The major support is the $1306.60 to $1291.50 retracement zone. This zone provided on March 1 when buyers stopped the sell-off at $1303.60.
The main range is $1364.40 to $1303.60. Its retracement zone at $1334.00 to $1341.20 stopped the rally at $1342.00 on Wednesday.
The short-term range is $1303.60 to $1342.00. Its retracement zone at $1322.80 to $1318.30 provided support on Thursday.
Traders need to watch the price action and read the order flow on tests of the retracement zones at $1334.00 to $1341.20 and $1322.80 to $1318.30.
Trend traders are going to try to stop the rally at $1334.00 to $1341.20 in an effort to form a potentially bearish secondary lower top. Taking out $1342.00 should trigger an acceleration to the upside.
Aggressive counter-trend buyers are going to try to stop the selling on a test of $1322.80 to $1318.30 in an effort to form a potentially bullish secondary higher bottom. The trigger point for an acceleration to the downside is $1318.30.
Basically, we’re looking for a sideways trade inside $1342.00 to $1318.30. These two prices are also the breakout levels, however, we’re going to need a spike in volume to make them work.
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.