December Comex Gold futures are trading higher but inside yesterday’s range. This typically indicates investor indecision and impending volatility. The weaker U.S. Dollar is underpinning gold today. Furthermore, the fact that hedge fund and money managers are net short, creates the potential for a short-covering rally.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, momentum seems to be ready to shift to the upside with the formation of the closing price reversal bottom on August 3.
A trade through $1212.50 will negate the chart pattern and signal a resumption of the downtrend. The main trend changes to up on a move through $1244.70.
The minor trend is also down. A trade through $1237.80 will change the minor trend to up. This will also shift momentum to the upside.
The main range is $1244.70 to $1212.50. Its 50% level or pivot at $1228.60 is also controlling the short-term direction of the market. Moving above this level will also confirm the closing price reversal chart pattern, leading to a shift in momentum.
Daily Technical Forecast
Based on the early trade, the direction of the December Comex gold market on Tuesday is likely to be determined by trader reaction to the downtrending Gann angle at $1222.70.
A sustained move over $1222.70 will indicate the presence of buyers. If this generates enough upside momentum then look for a rally into $1228.60. We could see sellers on the first test of this pivot.
Overcoming $1228.60 will indicate the buying is getting stronger. This could lead to a test of a pair downtrending Gann angles at $1233.70 and $1236.20.
Taking out $1237.80 will change the minor trend to up. This could trigger a further rally into a cluster of levels at $1244.60, $1244.70 and $1245.40.
A sustained move under $1222.70 will signal the presence of sellers. This move could create the downside momentum needed to challenge the bottom at $1212.50.