Overcoming $1246.30 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with the next downtrending Gann angle coming in at $1258.70. Look for sellers on the first test of this Gann angle.
Gold is finally breaking out to the upside after several days of consolidation. The market is now in a position to overcome a key 50% level that could launch an $18.00 rally in addition to current gains if the buying volume is strong enough. The catalyst behind the rally is safe-haven buying which is being fueled by another steep sell-off in U.S. equity markets.
At 1600 GMT, December Comex Gold futures are trading $1245.10, up $12.70 or 1.03%.
The main trend is up according to the daily swing chart. Today’s rally strengthened when buyers took out the previous high for the week at $1243.00. The uptrend was further confirmed when buyers took out the swing top at $1244.70. The next major upside target is the July 9 main top at $1278.20.
The main range is $1278.20 to $1167.10. Its retracement zone at $1222.70 to $1235.80 is new support. The next retracement zone target is $1246.30 to $1264.90. This is followed by the major 50% level at $1277.50. This price forms a resistance cluster with the main top at $1278.20.
Based on the early price action, look for a strong upside bias as long as December Comex Gold holds above the downtrending Gann angle at $1239.20. This is followed by the Fibonacci level at $1235.80.
If the upside momentum continues then look for the rally to extend into the 50% level at $1246.30.
Overcoming $1246.30 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with the next downtrending Gann angle coming in at $1258.70. Look for sellers on the first test of this Gann angle.
Overcoming the downtrending Gann angle at $1258.70 could trigger a further rally into the main Fibonacci level at $1264.90.
Watch the price action and read the order flow at $1246.30. Trader reaction to this level will determine if we pull-back into support or accelerate to the upside with $1264.90 the next likely upside 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.