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James Hyerczyk
Comex Gold

Gold is trading early Wednesday and in a position to do something it hasn’t done in eight trading sessions – take out the previous day’s high. With Treasury yields inching lower and the U.S. stock indexes weakening, it looks as if gold is attracting a little buying. We can’t tell at this time if its speculative buying, but we are fairly certain there is a little profit-taking and short-covering going on.

At 04:34 GMT, December Comex gold futures are trading $1461.30, up $7.60 or +0.52%.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1446.20 will signal a resumption of the downtrend. The main trend will change to up on a trade through $1522.30.

The minor trend is also down. A trade through $1461.30 will make $1446.20 a new minor bottom.

The main range is $1412.10 to $1566.20. Its retracement zone at $1471.00 to $1489.20 is controlling the near-term direction of the gold market.

The short-term range is $1522.30 to $1446.20. Its 50% level at $1484.10 is another potential upside target. It falls inside the main retracement zone.

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Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the December Comex gold futures contract on Wednesday will likely be determined by trader reaction to yesterday’s high at $1461.30.

Bullish Scenario

A sustained move over $1461.30 will indicate the presence of buyers. This will likely be fueled by buy stops placed by “dumb money”. The worst place to put a stop is over the previous day’s high or under the previous day’s low. If this is able to create enough upside momentum then look for the rally to possibly extend into the main Fibonacci level at $1471.00.

Overcoming $1471.00 will indicate the buying is getting stronger. This could fuel a further jump in prices into the 50% levels at $1484.10 and $1489.20.

Bearish Scenario

A sustained move under $1461.30 will signal the presence of sellers. The inability to overcome and sustain a rally over $1461.30 will also indicate the buying wasn’t even strong enough to hit the “dumb money” stops. This could lead to a retest of yesterday’s low at $1446.20.

Our main objectives are the August 1 bottom at $1412.10 and the July 1 bottom at $1396.40. However, we’re not going to get there unless Treasury yields continue to rise beyond their August highs.

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