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Futures Trade Desk- Big Test For Gold Bugs

Daily Client Note

Global Futures Review

Big Test For Gold Bugs

Gold Bullion (XAU):

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) 

Gold (XAU) 4-Hour Chart

Gold (XAU) 4-Hour Chart

Technical Wave: The move higher from 1530 to 1800 was reversed in an ABC-Down structure that set the A-leg from 1800 to 1710, the B-leg from 1710 to 1750, which set up a C-leg test of 1650 support. The 1750 resistance area will now be pivotal for bullish and bearish traders alike. The near-term fundamental outlook remains mixed, with strong opinions on both sides as to the merits of holding or selling bullion. There are still compelling common sense reasons to assume that dips will be bought, in-line with mid and long-term analysis that shows gold to be in a raging bull market. 

Buy Support: Bullish traders will be looking to buy initial short reversal to 1640, (just above the 200-day SMA, and the 62% Fiboncci retracement area from the move higher from 1530 to 1800), which could then target 1730 and 1780.

Sell Resistance: Bearish traders will be looking to sell long moves that fail at resistance around 1740 (the 50% Fiboncci retracement area from the move higher from 1530 to 1800) which could then target 1670 (the 50% Fiboncci retracement area from the move higher from 1530 to 1800), and subsequently 1625 (the 200-day SMA area) if global risk markets implode.

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, however volatile the intra-day moves become.

This Week: Look for the pattern of buying-the-dip to continue, but not without some major and consistent tests of support, and accept that news-headline related moves are dominating technical potential. The near-term trend and outlook is mixed, but many times this year buying opportunities have come from these set-ups. The intra-day trading range is extreme and signals that massive volatility remains a constant threat. The 200-day SMA area could offer the next main area of support if tested around 1625.