Gold Price Futures (GC) Technical Analysis – Needs to Hold Short-Term Retracement Zone at $1248.90 to $1246.60 to Sustain Rally

Gold futures are trading flat early Tuesday after an attempt to breakout over yesterday’s high failed to attract enough buyers to extend the rally. Nonetheless, the market continues to be underpinned by a weaker U.S. Dollar. A falling greenback tends to drive up foreign demand for dollar-denominated gold. Lower Treasury yields and aggressive position-squaring ahead of the Fed’s interest rate and monetary policy decisions on Wednesday are also contributing to the market’s strength.

At 0849 GMT, February Comex Gold futures are trading $1252.30, up $0.50 or +0.03%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1256.60 will signal a resumption of the uptrend. Earlier today, a new main bottom was formed at $1236.50. A trade through this bottom will change the main trend to down.

The short-term range is $1256.60 to $1236.50. The market is currently trading on the strong side of its retracement zone at $1248.90 to $1246.60, making this levels new support.

The intermediate range is $1216.80 to $1256.60. Its retracement zone at $1236.70 to $1232.00 provided support last Friday when buyers stepped in at $1236.50.

The main range is $1202.40 to $1256.60. Its retracement zone at $1229.50 to $1223.10 is the main support zone.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the February Comex gold market the rest of the session is likely to be determined by trader reaction to the short-term Fibonacci level at $1248.90.

Bullish Scenario

A sustained move over $1248.90 will indicate the presence of buyers. If this move can create enough upside momentum then there is nothing to stop it from reaching the closing price reversal and main top at $1256.60. Taking out this price will negate the chart pattern and signal a resumption of the uptrend.

Bearish Scenario

A sustained move under $1248.90 will signal the presence of sellers. This could drive the market into the short-term 50% level at $1246.60. The market could drop sharply if $1246.60 fails as support. The next downside target is a support cluster at $1236.70 to $1236.50.

Aggressive counter-trend sellers are going to try to form a secondary lower top.