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Gold Price Futures (GC) Technical Analysis – Strengthens Over $1289.30, Weakens Under $1285.70

By:
James Hyerczyk
Published: Jan 20, 2019, 06:49 UTC

Based on Friday’s price action, the direction of the February Comex gold futures contract on Monday is likely to be determined by trader reaction to the major 50% level at $1285.70.

Comex Gold

Gold futures finished lower on Friday while breaking out to the downside of a nine-day range. The selling was fueled by a rise in Treasury yields which made the U.S. Dollar a more attractive investment. A stronger dollar tends to drive down foreign demand for dollar-denominated gold. Also contributing to the weakness was increased risk appetite. The catalyst behind this was hopes of a speedy end to the U.S.-China trade dispute after reports revealed that the world’s two largest economies may have offered concessions to bring an end to the lengthy ordeal.

On Friday, February Comex gold settled at $1282.60, down $9.70 or -0.75%. For the week, the safe-haven asset was down $6.90 or -0.54%.

Comex Gold
Daily February Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum has softened since the formation of a closing price reversal top on January 4.

A trade through $1278.10 will confirm the closing price reversal top. A move through $1300.40 will negate the closing price reversal top and signal a resumption of the uptrend.

The major long-term range is $1285.70 to $1312.30. This zone played a role in stopping the rally earlier in the month at $1300.40.

The short-term range is $1300.40 to $1278.10. Its 50% level or pivot at $1289.30 has played both support and resistance for 10 sessions.

The main range is $1236.50 to $1300.40. If the selling continues then its 50% level at $1268.50 will become the primary downside target.

Additional retracement level targets come in at $1258.60 and $1251.40.

Daily Swing Chart Technical Forecast

Based on Friday’s price action, the direction of the February Comex gold futures contract on Monday is likely to be determined by trader reaction to the major 50% level at $1285.70.

Bullish Scenario

Overtaking and sustaining a rally over $1285.70 will indicate the presence of buyers. Overcoming the short-term pivot at $1289.30 will indicate the buying is getting stronger. This will put the market in a position to challenge the main top at $1300.40.

Bearish Scenario

A sustained move under $1285.70 will signal the presence of sellers. If the selling pressure increases on the move then look for traders to make a run at $1278.10. Taking out this level could trigger an acceleration to the downside with the next major target the 50% level at $1268.50.

About the Author

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.

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