The early price action suggests the direction of the April Comex gold market is likely to be determined by trader reaction to the pivot at $1831.80.
Gold futures are inching toward a one-week high early Tuesday after posting a second day of gains the previous session. The strength is being fueled by a weaker U.S. Dollar and increasing hopes that a massive U.S. fiscal stimulus package designed to revive the U.S. economy will soon be signed into law.
At 05:02 GMT, April Comex gold futures are trading $1842.90, up $8.70 or +0.47%.
The greenback fell to an over one-week low against rival currencies, making gold cheaper for holders of other currencies. Meanwhile Biden’s $1.9 trillion COVID-19 relief package is expected to pass through Congress before March 15 even without Republican support.
The main trend is down according to the daily swing chart. A trade through $1784.60 will reaffirm the downtrend. The main trend will change to up on a move through $1878.90.
The major support is a long-term retracement zone at $1787.30 to $1711.70. This zone stopped the selling on November 30 at $1771.30 and on February 4 at $1784.60.
The short-term range is $1878.90 to $1784.60. The market is currently straddling its 50% level at $1831.80.
The intermediate range is $1966.80 to $1784.60. Its retracement zone at $1875.70 to $1897.20 is potential resistance.
The main range is $2107.60 to $1771.30. Its retracement zone at $1939.50 to $1979.10 stopped the rally at $1966.80 on January 6.
The early price action suggests the direction of the April Comex gold market on Tuesday is likely to be determined by trader reaction to the pivot at $1831.80.
A sustained move over $1831.80 will indicate the presence of buyers. If this generates enough upside momentum then look for a rally into the intermediate 50% level at $1875.70, followed closely by a main top at $1878.90.
A sustained move under $1831.80 will signal the presence of sellers. This could trigger a quick break into about $1814.70. If this fails then look for the selling to possibly extend into the main bottom at $1784.60.
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.