February Comex Gold futures are trading lower early in the session. The market surged shortly after the opening in reaction to the news regarding the Italian Referendum that led to resignation of the country’s prime minister. However, the move came to an end after the U.S. Dollar gapped on the opening.
The main trend is down according to the daily swing chart. The trend will turn up on a trade through $1223.50. A new main bottom was formed today at $1162.20. A trade through this bottom will signal a resumption of the downtrend and make $1190.20 a new main top.
The major range is $1055.20 to $1387.10. Its retracement zone is $1221.20 to $1176.20. The market is currently trading on the weak side of this zone. Holding below this zone is also an indication of weakness. If the selling pressure continues to strengthen then we may see an eventual break into last December’s bottom at $1055.20. Earlier today, gold straddled the Fibonacci level at $1182.00, but there wasn’t enough buying to sustain the move.
The intermediate range is $1236.10 to $1162.20. Its retracement zone at $1199.20 to $1207.90 is the next upside target. Since the trend is down, we may see selling on the first test of this zone.
The short-term range is $1162.20 to $1190.20. Its 50% level or pivot is $1176.20. Gold is currently straddling this price. Traders should watch the price action at $1176.20 because buyers are going to try to form a potentially bullish secondary higher bottom.
Based on the current price at $1174.10, the direction of the gold market the rest of the session is likely to be determined by trader reaction to $1176.20.
A sustained move under $1176.20 will indicate the presence of sellers. The next two target angles come in at $1170.20 and $1166.20. The latter is the last potential support angle before the $1162.20 main bottom.
A sustained move over $1176.20 will signal the presence of buyers. This could generate the upside momentum needed to challenge the main Fibonacci level at $1182.00 and the major downtrending angle at $1188.10. Watch for selling on the first test of this angle but be prepared for an acceleration to the upside if this angle is violated. This is a trigger point for a breakout rally.
Watch the price action and read the order flow at $1176.20 today. Trader reaction to this level will tell us if the buying is getting stronger, or if the sellers are still in control.