Based on the early trade, the direction of the gold market today is likely to be determined by trader reaction to the downtrending Gann angle at $1322.50.
A weaker U.S. Dollar and a relatively calm stock market is helping to drive April Comex Gold futures higher shortly before the U.S. opening. It could be short-covering and position-squaring ahead of Wednesday’s U.S. consumer inflation report.
The main trend is down according to the daily swing chart. Today’s price action has made $1309.00 a new main bottom. A trade through this bottom will signal a resumption of the downtrend.
The main range is $1242.70 to $1370.50. Its retracement zone is $1306.60 to $1291.50. This zone is still the primary downside target. Last week’s low stopped just above this zone.
The short-term range is $1370.50 to $1309.00. If the rally continues then its retracement zone at $1339.80 to $1347.00 will become the primary upside target. Since the main trend is down, sellers are likely to show up on a test of this zone.
Based on the early trade, the direction of the gold market today is likely to be determined by trader reaction to the downtrending Gann angle at $1322.50.
A sustained move under $1322.50 will indicate the presence of sellers. This could lead to a test of a series of uptrending Gann angles at $1317.00, $1313.00 and $1311.00. This is followed by the main bottom at $1309.00.
If $1309.00 fails as support then look for the selling to extend into the main retracement zone at $1306.60 to $1291.50.
A sustained move over $1322.50 will signal the presence of buyers. The first target is a long-term uptrending Gann angle at $1313.00. This is the trigger point for an acceleration to the upside with $1339.80 the next major target.
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.