James Hyerczyk
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Comex Gold

Gold futures surged to the upside late Friday after the U.S. Dollar plunged against a group of major currencies into the close. Traders said thin post-holiday trading conditions probably contributed to the sudden reversal with some saying concerns over U.S.-China trade relations made a few investors nervous ahead of the week-end.

On Friday, February Comex gold settled at $1465.50, up $4.80 or +0.33%.

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Daily February Comex Gold

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher following the closing price reversal bottom on November 26 at $1456.60 and the confirmation on Friday.

A trade through $1486.00 will change the main trend to up. A move through $1456.60 will negate the closing price reversal bottom and signal a resumption of the downtrend. This is followed closely be another main bottom at $1453.10.

The short-term range is $1486.00 to $1456.60. Its retracement zone at $1471.30 to $1474.80 is near-term resistance. The market closed inside this area on Friday.

The main range is $1525.20 to $1453.10. If the trend changes to up then look for the rally to possibly extend into its retracement zone at $1489.20 to $1497.70.


Short-Term Outlook

The late session rally on Friday caught traders by surprise but we suspect it was fueled by short-covering since the main trend is down.

If the market is bottoming then the first leg up is usually fueled by short-covering, then there is a pullback to retest support. If aggressive counter-trend buyers step in on the break then look for them to try to change the main trend to up by taking out the swing top.

With the trend down, sellers could reemerge on Monday since the retracement zone at $1471.30 to $1474.80 is resistance. They are going to try to form a secondary lower top.

If buyers can take out the short-term retracement zone then this will indicate the rally is being fueled by a combination of short-covering and speculative buying.

The Gann angle at $1472.00 and the short-term 50% level at $1471.30 form a price cluster. Crossing to the weak side of this zone will indicate the presence of sellers.

Crossing to the strong side of the price cluster at $1471.30 to $1472.00 will signal the presence of buyers. This could trigger a further rally into a short-term Fibonacci level at $1474.80, followed by a downtrending Gann angles at $1479.00 and $1485.20.

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