Based on the early price action, the direction of the August Comex Gold market the rest of the week is likely to be determined by trader reaction to the Fibonacci/uptrending Gann angle support cluster at $1300.60 to $1299.90.
August Comex Gold futures are trading lower for the week after posting a potentially bullish closing price reversal bottom last week. There has been no follow-through to the upside so the chart pattern has not been confirmed.
Gains are likely being limited by the soaring U.S. Dollar which is hurting demand for the dollar-denominated asset. However, gold is getting plenty of support from the fundamental side of the equation. Geopolitical issues include worries over a U.S.-China trade war, the on, off, maybe on meeting between the U.S. and North Korea, a tanking Euro and political turmoil in Italy and Spain.
The main trend is down according to the weekly swing chart. However, last week’s closing price reversal bottom signaled a shift in momentum to the upside.
A trade through $1275.90 will confirm the closing price reversal bottom. This could fuel the start of a 2 to 3 week counter-trend rally.
A move through $1286.80 will negate the reversal bottom and signal a resumption of the downtrend.
The main range is $1251.90 to $1379.30. The market is currently straddling the bottom of its retracement zone at $1315.60 to $1300.60. This zone is controlling the longer-term direction of the market.
The short-term range is $1375.10 to $1286.80. If the closing price reversal bottom is confirmed, we could see a rally into its retracement zone at $1331.00 to $1341.40.
Based on the early price action, the direction of the August Comex Gold market the rest of the week is likely to be determined by trader reaction to the Fibonacci/uptrending Gann angle support cluster at $1300.60 to $1299.90.
Holding above $1300.60 will signal the presence of buyers. If this creates enough upside momentum then look for the rally to extend into the 50% level at $1315.60, followed by the steep downtrending Gann angle at $1319.10.
The trigger point for an acceleration to the upside is the downtrending Gann angle at $1319.10. This could lead to a rally into $1331.00.
A sustained move under $1299.90 will indicate the presence of sellers. This could trigger a retest of $1286.80. If this price level fails then look for the selling to extend into the next uptrending Gann angle at $1275.90.
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.