Technicals | Jan 31 2018
Bottom Line 30/01/18
Daily Trend: Neutral
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 1310 / 1241 / 1217
Resistance Levels: 1372 / 1414 / 1482
Technical Discussion
Gold extended some loses last night and even though we see the potential for the precious metal to turn bullish in 2018 at some stage, there are still no guarantees until 1372 can be broken above with conviction. Price has increased 3% so far in January yet a lot of this has been attributed to Greenback weakness with the USD Index locking in its 6th weekly fall last week. Yet off a deeply oversold position some strength has come back into the currency and any upside follow through from here is likely to see Gold under some continued pressure, at least over the more immediate time frames.
Reasons to remain cautious:
→ price chart has been damaged bigger picture so any recovery will take time
→ larger cycle 61.8% retracement still holding at 1054
→ looking for 1200 to hold shorter term
We are sticking to the weekly chart again as it cuts out an immense amount of noise and also clearly shows the pattern we are continuing to monitor which is the triangle basing pattern. It appears to be building energy since late 2015 and we continue to like its bullish breakout potential at 1372 (on the immediate contract). Any such move puts the triangle target up towards 1700 in focus. Price last week tagged 1368 so just short to this point, and as mentioned with the Greenback taking on some speculative buying over the past couple of sessions, we could still see one last minor dip in Gold before a higher swing low pattern sets the scene for the long awaited breakout higher. Combined with USD strength there is also some Type-A bearish divergence presently in play on the dailies and in our view this is going to need to trigger and revert back to oversold before a convicted break out move is going to be ready to start moving north with conviction. The analysis weakens below 1241 !
Trading Strategy
We have a formal recommendation out on Gold at the moment, long at 1372 (new contract), with stops at 1241. If we get the dip that we are anticipating, under the right conditions we may even get more aggressive over the coming weeks and offer up a swing trade opportunity from lower. Watching closely.
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