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Gold Price Futures (GC) Technical Analysis – Trader Reaction to 50% Level at $1981.70 Sets the Tone

By:
James Hyerczyk
Published: Sep 2, 2020, 06:02 UTC

The direction of the December Comex gold futures contract is likely to be determined by trader reaction to the 50% level at $1981.70.

Comex Gold

Gold futures are under pressure early Wednesday as the U.S. Dollar rebounded after robust U.S. manufacturing data bolstered hopes around the global economic recovery, tempering foreign demand for the dollar-denominated asset.

After hitting a two-week high on Tuesday, gold prices started to retreat in response to a bounce by the greenback. The U.S. Dollar rebounded off two-year lows against a basket of major currencies after U.S. data showed manufacturing activity accelerated to a near two-year high in August. The firm manufacturing activity also boosted investor demand for riskier assets, limiting inflows into safe-haven bullion.

At 05:41 GMT, December Comex gold is trading $1969.60, down $9.30 or -0.47%.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but the formation of the secondary lower top at $2024.60 may be indicating a possible shift in momentum. A trade through this top will signal a resumption of the uptrend. The main trend changes to down on a move through the last swing bottom at $1908.40.

The minor trend is also up. A new minor top was formed at $2001.20 earlier in the session on Wednesday.

The short-term range is $2089.20 to $1874.20. Its retracement zone at $1981.70 to $2007.10 is resistance. This zone stopped the buying on Tuesday at $2001.20.

The new minor range is $1908.40 to $2001.20. Its 50% level at $1981.70 is the first downside target. Since the main trend is up, buyers could come in on a test of this level. Look out to the downside, however, if this level fails as support.

The major support is the $1889.70 to $1842.60 retracement zone.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the December Comex gold futures contract is likely to be determined by trader reaction to the 50% level at $1981.70.

Bearish Scenario

A sustained move under $1981.70 will indicate the presence of sellers. This could trigger a break into the minor pivot at $1954.80. Buyers could come in on the initial test of this level.

The 50% level at $1954.80 is also a potential trigger point for an acceleration to the downside with the next major target the main bottom at $1908.40.

Bullish Scenario

Overcoming and sustaining a move over $1981.70 will signal the presence of buyers. This could create the momentum needed to challenge the minor top at $2001.20 and the Fibonacci level at $2007.10. The latter is a potential trigger point for an acceleration into the main top at $2024.60.

For a look at all of today’s economic events, check out our economic calendar.

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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