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Futures Trade Desk- Gold Bugs Have Choices

Trade Desk Client Note

Global Futures Market Review

Gold Bugs Have Choices

Trend: Mixed Momentum: Mixed Sentiment: Mixed Daily Trading Range: High $54 (3.2%)

Daily Simple Moving Average Lines: Blue (20 SMA) Green (50 SMA) Orange (100 SMA) Red (200 SMA) 

TheLFB XAU 4-Hour Chart

TheLFB XAU 4-Hour Chart

Technical Wave: The move higher from 1530 to 1800 is being reversed in what looks like an ABC-Down structure, which set the A-leg from 1800 to 1660. The B-leg reversal from 1660 to 1710 sets up a potential C-leg that could test 1630. The 1700 resistance area will now be pivotal for bullish and bearish traders alike. The fundamental outlook remain mixed, with strong opinions on both sides as to the merits of holding or selling bullion.

Buy Support: Bullish traders will be looking to buy any short reversal to 1630, (the 62% Fiboncci retracement area from the move higher from 1530 to 1800), which could then target 1720 and 1780.

Sell Resistance: Bearish traders will be looking to sell long moves that fail at resistance around 1735 (the 23% Fiboncci retracement area from the move higher from 1530 to 1800) which would then target 1700 (he 36% Fiboncci retracement area from the move higher from 1530 to 1800), and subsequently 1665.

Overall: A technical picture that confirms bullion positions are being built for the long haul, but not without some serious tests of near-term support, as global markets are forced to constantly re-price equity and interest rate risk. The 3.2% of daily movement is keeping traders busy. Reversals to main support have been bought so far this year, and nothing suggest that will change.

This Week: Look for the pattern of buying-the-dip to continue, and accept that news-headline related moves are dominating technical potential. The trend and outlook is mixed, but many times this year buying opportunities have come from those set-ups. The intra-day trading range is extreme and signals that massive volatility remains a constant threat. The 50 and 100-day SMA areas could offer solid support if tested around 1700.