The COMEX Gold underwent a strong correction on Friday, and retraced by USD37.80 to close at USD2,331.20. The commodity opened at USD2,373.80 and rose to the session’s high of USD2,382.60. It then reversed direction to print the session’s low of USD2,329.20 before closing – thereby charting a Bearish Engulfing candlestick.
The latest price action has sent the commodity below both 20- and 50-day SMA lines. As such, the bears have the technical advantage now. As long as the commodity stays below both moving average lines, expect the negative price action to follow through in the coming sessions. The RSI has fallen below the 50% mark, showing that a negative momentum is in play now. An extension of the bearish setup would see a fresh “lower low”, where the commodity may pull back towards next support level of USD2,300. Since the bears are in the driver’s seat now, RHB has said that it makes no to its negative trading bias.
The house advises traders to stick to the short positions initiated at the close of 7 Jun or USD2,325. To manage the trading
risks, the initial stop-loss is placed at the USD2,400 mark. The first support is located at USD2,300, followed by the USD2,200 level. On the other hand, the first resistance has formed at USD2,400, followed by the USD2,477 level, ie the high of 20 May.
