Based on the early price action and the current price at $1467.10, the direction of the February Comex gold futures contract on Monday is likely to be determined by trader reaction to the uptrending Gann angle at $1464.60.
Gold is easing higher on Monday shortly before the regular session opening. Earlier in the session, sellers attempted to follow-through to the downside, following Friday’s steep sell-off, but there wasn’t much volume behind the move.
Stocks are edging lower along with Treasury yields. This is helping to make the U.S. Dollar less-attractive, while increasing demand for dollar-denominated gold. Traders sold gold on Friday because of stronger-than-expected U.S. economic data. However, most of the week, it was trading higher because of concerns over the progress of the U.S.-China trade talks.
At 10:09 GMT, February Comex gold is trading $1467.10, up $2.00 or +0.14%.
The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top on December 4 at $1489.90.
A trade through $1456.60 will change the main trend to down. A move through $1489.90 will negate the closing price reversal top and signal a resumption of the uptrend.
The short-term range is $1456.60 to $1489.90. It is currently trading on the weak side of its retracement zone at $1469.30 to $1473.30, making it resistance.
The main range is $1525.20 to $1453.10. Its retracement zone at $1489.20 to $1497.70 is resistance. The lower or 50% level of this range stopped the selling last week at $1489.90.
On the downside, the major target is a 50% level at $1432.00.
Based on the early price action and the current price at $1467.10, the direction of the February Comex gold futures contract on Monday is likely to be determined by trader reaction to the uptrending Gann angle at $1464.60.
A sustained move over $1464.60 will indicate the presence of buyers. This could trigger a labored rally with potential resistance lined up at $1469.30, $1472.60, $1473.30 and $1475.20. The latter is a potential trigger point for an acceleration to the upside with the next targets $1489.20 and $1489.90.
A sustained move under $1464.60 will signal the presence of sellers. Additional support angles come in at $1460.60 and $1458.60. The latter is the last potential support angle before the $1456.60 and $1453.10 main bottoms.
Monday’s price action suggests Friday’s sell-off may have been a little overcooked. I think traders realize it’s not about the economy at this time, per se, but rather the outcome of the trade talks with the December 15 deadline looming.
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.