Technicals | Jun 21 2018
Bottom Line 19/06/18
Daily Trend: Down
Weekly Trend: Down
Monthly Trend: Down
Support Levels: 1252 / 1230
Resistance Levels: 1331 / 1383
Technical Discussion
'Our bias has been looking for an upside breakout, yet having a bias does not mean we stick with it if price action tells us otherwise. Price action is our leading indicator and therefore this is what always needs to be followed without fail.' And this goes for every market we trade, so not just for Gold. We are checking in on the weekly chart tonight to cut out some of the noise and it clearly shows that even if we get a little further weakness from here, the basing triangle pattern that we have been banging on about for such a long period of time, will still remain valid. Any drop below [Comex US$/oz] 1227.00 (new contract) though, then all bets are off in regards to the bullish potential we are seeing in this price chart. Lets take a closer look at the technicals.
Reasons to remain cautious:
→ price chart has been damaged bigger picture so any recovery is taking time
→ larger cycle 61.8% retracement still holding at 1054
→ above 1383 potentially reverting price action to medium term bullish
Our proposed triangle basing pattern has been in play since April 2015, so clearly price action has been in a massive grind over the past three as it attempts to shake off the longer term multi year downtrend. There are just no guarantees though that it has, even after all this time. There are three price points that need to be overcome before we are convinced that the worst of the downside move is over with. The first is at 1383, the second is at 1425 and the third is at 1493 on the immediate contract. Until these milestones can be achieved via levels moving well above these price points, then the proposed basing triangle on our chart could easily still evolve into a bearish continuation pattern.
The early signs telling us that the bears are about to sink their claws in again will be via a move below 1227, so keep this price point in the backs of your minds. Price is well oversold on the weeklies and heading back into the same on the dailies, with the rising line of support aligned to the lower boundaries of the triangle basing pattern now supportive at 1260. Price has recently dropped to 1275, so there is certainly scope for the 1260 price zone to be challenged over the coming weeks. Buyers will definitely be needed down at this level though if the basing process is to continue to remain robust. Clearly things could still go either way here.
Trading Strategy
There is no point getting involved right at this juncture based on the immediate analysis. Looking at numerous aspects of the longer term charts we do continue to back our bigger bigger bullish outlook, yet it will all be for nothing if 1260 starts to give way, with all bets off below 1227 as stated. Geopolitically these are very unusual times, so expect the unexpected !
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