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James Hyerczyk
Gold
Gold

August Comex Gold futures are trading sharply lower shortly before the New York opening. The market was trading steady and without much fanfare most of the session before a fat-fingered trader reportedly sold 20,000 futures contracts, driving the market from $1254.30 to $1236.50 in one minute at 0801 GMT.

There has been no follow-through to the downside since the so-called “flash crash” so we could see a technical bounce once the smoke clears.

Daily August Comex Gold

Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed when the market took out the last swing bottom at $1241.70. If the selling continues through the intraday low at $1236.50 then it could extend into the next main bottom at $1217.80. A trade through $1260.00 will change the main trend to up.

The main range is $1217.80 to $1298.80. Its retracement zone is $1258.30 to $1248.70. The market is trading under this zone, reaffirming the downside bias.

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Forecast

Based on the current price at $1243.00, the direction the rest of the session is likely to be determined by trader reaction to the downtrending angle at $1242.80.

A sustained move over $1242.80 will indicate that buyers are returning. This could create enough upside momentum to retest the main Fibonacci level at $1248.70. This is followed by an uptrending angle at $1250.80.

Holding above $1250.80 will indicate the buying is getting stronger. This could lead to a retest of the 50% level at $1258.30. This price was originally tested earlier today.

A sustained move under $1242.80 will signal that sellers are retaking control. This could lead to a test of the intraday low at $1236.50 and the uptrending angle at $1234.30. If sellers take out this angle then look for an acceleration into the next uptrending angle at $1226.00. This is the last potential support angle before the $1217.80 main bottom.

Watch the price action and read the order flow at $1242.80 all session. Trader reaction to this angle will tell us if buyers have returned or if sellers are maintaining control.

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