Gold Price Futures (GC) Technical Analysis – Closing Price Reversal Top Confirmed on Trade Through $1279.70

Gold prices closed lower on Monday after hitting a six-month high as investors booked profits and squared positions ahead of the new year. Traders ignored another drop in Treasury yields and a weaker U.S. Dollar, but these two factors are likely to be the stimulus for further upside action early next year.

On Monday, February Comex gold settled at $1281.30, down $1.70 or -0.13%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum may be getting ready to shift to the downside with the formation of the closing price reversal top.

If the selling pressure was related solely to position-squaring then we’re likely to see a resumption of the uptrend on Wednesday. The main trend will resume when buyers take out $1286.50.

If the selling on Monday was an attempt to shift momentum then look for sellers to drive the market through $1279.70. This move will confirm the closing price reversal top. It could also trigger the start of a 2 to 3 day correction with $1261.50 the next potential downside target.

On the upside, the major retracement zone resistance is $1285.70 to $1312.30.

On the downside, the first target is the short-term 50% level at $1261.50. The second potential downside target is the 50% level at $1251.70. The main retracement zone support is $1244.50 to $1234.50.

Since the main trend is up, buyers are likely to come in on tests of these retracement levels.

Daily Swing Chart Technical Forecast

Based on Monday’s closing price reversal top chart pattern, the direction of the February Comex gold futures contract is likely to be determined by trader reaction to Monday’s low at $1279.70.

Bullish Scenario

Holding $1279.70 then taking out $1286.50 will negate the closing price reversal top and signal a resumption of the uptrend. This will also put the market on the strong side of the 50% level at $1285.70. The daily chart indicates there is plenty of room to the upside with $1312.30 the next major upside target.

Bearish Scenario

Taking out $1279.70 will confirm the closing price reversal top. This move will indicate the selling is greater than the buying at current price levels. It doesn’t mean the trend has changed to down, but it could create the downside momentum needed to challenge the short-term 50% level at $1261.50.