Talking Points
- Gold rebound eyeing key resistance- longs at risk sub-1220
- Updated targets & invalidation levels
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Gold Weekly
Technical Outlook: Heading into the start of 2017 trade we had highlighted the threat of a more significant recovery in gold as prices approached critical support at 1120/30. The subsequent rebound has now taken out all three topside objectives into key resistance at 1219. This region is defined by the 38.2% retracement of the July decline and converges on the 50-line of the ascending median-line formation off the 2013 & 2015 lows. The immediate long-bias is at risk while below this threshold.
Gold Daily
Notes: A closer look at the daily chart shows prices trading within the confines of this well-defined descending pitchfork formation off the highs with median-line resistance further highlighting the 1219/20 barrier. Note that daily momentum is also testing 70 on this swing higher – watch today’s close.
Bottom line: Interim support is now eyed at 1200/03 with near-term bullish invalidation now raised to 1182. A breach above this key region targets subsequent topside objectives at 1240/41 & the 50% retracement at 1249. Keep in mind we have the release of the U.S. Consumer Price Index (CPI) tomorrow with the release likely to fuel added volatility in dollar denominated assets.
- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net long gold- the ratio stands at +1.74 (64% of traders are long)- weak bearish reading
- Long positions are 2.0% lower than yesterday and 16.2% below levels seen last week
- Short positions are 5.0% higher than yesterday and 19.3% above levels seen last week
- Open interest remains 7% below its monthly average.
- Waning market participation suggests short-interest is getting cleared out here as gold continues to advance. Current conditions favor higher gold prices so long as these conditions persist.
Looking for trade ideas? Review DailyFX’s 2017 1Q Projections
Other Setups in Play:
- GBP/USD Eyes Last Line of Defense Ahead of UK Jobs, US CPI
- USD/CAD at Risk for Further Losses While Sub-1.33
- USD/JPY Flirts with Support- Bearish Sub 117
- EUR/GBP at Risk for a Larger Pullback- Bearish Invalidation 8822
- Webinar: Key Technical Levels for First Full Week of 2017 Trade
---Written by Michael Boutros, Currency Strategist with DailyFX
Join Michael for Live Weekly Trading Webinars on Mondays on DailyFX at 13:30 GMT (8:30ET)
FollowMichael on Twitter @MBForex or contact him at mboutros@dailyfx.com
