Based on the early price action, the direction of the December Comex Gold futures market is likely to be determined by trader reaction to the Fibonacci level at $1235.80.
Gold is trading higher early Thursday as investors watch the stock market rout continue in the Asian session. In these types of matters, gold is not an investment, it is a safe-haven asset. That’s why buyers are being cautious. However, the slow and steady climb that has chewed through numerous resistance levels has put the market in a position to breakout to the upside with several potential upside targets coming in $20 and $30 above the current price.
At 0329 GMT, December Comex Gold is trading $1240.10, up $9.00 or +0.72%.
The main trend is up according to the daily swing chart. A trade through $1243.00 will signal a resumption of the uptrend. This is followed closely by another main top at $1244.70. The next target above this level expands all the way up to $1278.20.
The trend is in no danger of turning down. A closing price reversal top will be the first sign that the selling is greater than the buying at current price levels.
The main range is $1278.20 to $1167.10. Its retracement zone is $1222.70 to $1235.80. This zone is controlling the longer-term direction of the market. Trading above it is helping to give the market an upside bias.
The next key retracement zone is $1246.30 to $1264.90, followed by a 50% level at $1277.50.
The short-term range is $1184.30 to $1243.00. If $1222.70 fails as support then look for the selling to extend into its retracement zone at $1210.60 to $1204.40.
Based on the early price action, the direction of the December Comex Gold futures market is likely to be determined by trader reaction to the Fibonacci level at $1235.80.
A sustained move over $1235.80 will indicate the presence of buyers. Taking out $1243.00 will indicate the buying is getting stronger with the next target the July 23 main top at $1244.70. This is followed closely by the 50% level at $1246.30.
We could see a technical bounce on the first test of $1246.30, but if it is taken out, we could see an acceleration to the upside with the Fibonacci level at $1264.90 the next upside target, followed by a 50% level at $1277.50 and a main top at $1278.20.
A sustained move under $1235.80 will signal the presence of sellers. This won’t change the main trend to down, but it could trigger a hard break with $1222.70 the next likely target. This price is another trigger point for an acceleration into $1210.60 to $1204.40.
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.