Technical Analysis – Gold – Stronger but lacks momentum

Fri, 16 May - 9:47am
Short Term:
Medium Term:
Long Term:
Resistances:
R1 1310 Upper BB
R2 1315.75 Recent resistance
R3 1331.25 Recent peak
R4 1342.60
R5 1375.65 Sept 19 peak
R6 1388.70 March high
R7 1434 Last summer’s high
Support:
100 1283.40
Support:
S1 1285.50 50% Fibo
S2 1282 Recent support
S3 1281.65 April 21 low
S4 1280 Lower BB
S5 1268.50 Recent dip low
S6 1261 61.8% Fibo
S7 1235
S8 1182.45 Dec low
S9 1180 June low
S10 1155 July 2010 low
Stochastics:Neutral
Legend:Fibo = Fibonacci retracement line

 

DMA = Daily moving average

MACD = Moving average convergence divergence

H&S = Head-and-shoulder pattern

UTL = Uptrend line

BB = Bollinger band

Technical Comment

Analysis

  • Gold prices are stuck sideways – the market is vulnerable because this sideways pattern could be a bearish continuation pattern. That said, attempts to break lower have not seen follow-through selling.
  • We have generally expected dips to be well supported, which has been the case. The market now needs buyers to return.
  • (The latest Commitment of Traders Report from last week showed the net long gold position climbed 12,729 contracts, with 13,213 new longs – so there was some fresh buying around last week.)
  • The stochastics have crossed positively, which provides some support for a rally, but it will no doubt take a breakout to get momentum going.
  • We feel it will take a close above $1,316 to signal a breakout; such a move would also take prices above the upper BB, which is at $1,310.
  • The question now is whether gold is a sell while prices approach the top of the range or whether to get positioned for a breakout.

Conclusion

Overall, we feel gold is hammering out a base around $1,280. We feel the market is not exactly bearish for gold but neither is it particilarly bullish.
All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.

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