Gold Price Futures (GC) Technical Analysis – Could Break into $1488.60 to $1470.50 Value Area

Gold futures tumbled on Thursday erasing all of this week’s gains in reaction to higher Treasury yields and increased demand for higher risk assets. The moves drove up the U.S. Dollar, which weighed on foreign demand for the dollar-denominated asset. The catalyst behind the change in investor sentiment was a positive development in U.S.-China trade relations that helped dampen fears of an escalation of the trade war and the chances of a global economic slowdown.

At 20:02 GMT, December Comex gold is trading $1537.40, down $11.70 or -0.75%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has shifted to the downside with the confirmation of the August 26 closing price reversal top at $1565.00.

A trade through $1565.00 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through $1412.10.

The minor trend is up. A trade through $1488.90 will change the minor trend to down. This will confirm the shift in momentum.

A trade through $1534.80 on Thursday confirmed the closing price reversal top. This doesn’t mean the trend changed to down, but it could lead to a 2 to 3 day correction.

The minor range is $1488.90 to $1565.00. Its 50% level or pivot at $1527.00 is the primary downside target. The level has been controlling the direction of the market for several weeks.

The main range is $1412.10 to $1565.00. If $1527.00 fails as support then look for a potential break into its retracement zone at $1488.60 to $1470.50.

Short-Term Forecast

Watch the price action and read the order flow on a test of $1527.00. Trader reaction to this level should set the tone of the day on Friday.

Traders should also watch $1537.60. This is last week’s close. Finishing under this level will form a weekly closing price reversal top. This could lead to the start of a 2 to 3 week correction.

I see more downside risk than upside potential over the short-run. Since August 13, traders have had a hard time buying strength. This usually means they’re looking for value and this could lead to a test of the retracement zone at $1488.60 to $1470.50. This is the nearest value zone.