Based on the early trade, the direction of the gold market today is likely to be determined by trader reaction to the steep uptrending Gann angle at $1254.30.
February Comex Gold futures are trading higher on Monday. Traders are reacting to a weaker U.S. Dollar and concerns over U.S. tax reform. Gains are probably being limited by a sharp rise in U.S. equity markets.
The main trend is down according to the daily swing chart. Short-term momentum is showing signs of strength, but the market is still in short-covering and retracement mode. A trade through $1264.50 will indicate the early buying is getting stronger. A move through $1238.30 will signal a resumption of the downtrend.
The short-term range is $1238.30 to $1264.50. Its retracement zone at $1251.40 to $1248.30 is the primary downside target.
The main range is $1303.40 to $1238.30. Its retracement zone at $1270.90 to $1278.50 is the primary upside target.
A major Fibonacci level comes in at $1272.30. This level forms a potential resistance cluster with the main 50% level at $1270.90.
Based on the early trade, the direction of the gold market today is likely to be determined by trader reaction to the steep uptrending Gann angle at $1254.30.
A sustained move over $1254.30 will indicate the presence of buyers. If buyers can generate enough upside momentum then we could see a rally into a resistance cluster formed by Gann angles and retracement levels at $1270.30, $1270.90, $1272.30 and $1273.40. Since the main trend is down, we’re likely to see sellers show up on a move into this area.
A sustained move under $1254.30 will signal the presence of sellers. This could trigger a further decline into the short-term 50% level at $1251.40, the short-term Fibonacci level at $1248.30 and the uptrending Gann angle at $1246.30.
If $1246.30 fails as support then look for the selling to extend into the next uptrending Gann angle at $1242.30. This is the last potential support angle before the $1238.30 main bottom.
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.