Technicals | Jul 21 2021
Bottom Line 20/07/21
Daily Trend: Neutral
Weekly Trend: Down
Monthly Trend: Down
Support Levels: $1700 – $1650 / $1625
Resistance Levels: $1919 – $1962 / $2137 (Aug 2021 contract)
[All prices US$/oz Comex gold futures.]
Technical Discussion
Reasons to be bullish longer-term (caution shorter-term):
→ longer-term upside price action solid off the August 2018 lows
→ bullish decade long cup and handle pattern now well evolved on the longer-term charts
→ retesting of the handle breakout now needs to prove
We were certainly very happy with the handle breakout back in May. And we had no problem with the retesting phase when price headed back towards $1800 in mid-June. Yet since then, price has travelled a little lower down to $1750 which was deeper than what we would have liked. The move has also unfolded as a minor degree 5-wave pattern which has added some extra caution to this push lower.
Yet the move to $1750 is only slightly below the 61.8% retracement of the previous move north. And as we know for wave-(ii)’s this is not atypical for depth. The bounce off these lows has once again broken out of the lowering channel which formed the handle of the multi-year cup and handle pattern. So this is a positive if the breakout move can continue to stick from here.
Interesting to note is that our shorter-term trend indicator is presently neutral, with our medium and longer-term trend indicators being down. Yet if price can lock in a higher swing low pattern from here and break above $1835 on the immediate contract, then all these trend indicators will quickly revert to being up. A move that will also take price back above the 200 day MA which will be an added bonus. So price action is continuing to hang in there from a longer-term bullish perspective, yet only just. Red flag only below $1650.00.
Trading Strategy
Price action still has plenty to prove if our longer bullish rhetoric is going to come to fruition. Yet based on everything we have been forwarding over a many number of months, there is now an opportunity to trade the contract long. Yet this recommendation is only for more experienced traders who are comfortable with aggressive recommendations. So if this fits your profile, the recommendation tonight is to trade long at $1836.00, with initial stops placed at $1749.00. We will manage the position using a trailing stop.
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