A sudden reversal to the upside in the U.S. Dollar is helping to pressure February Comex Gold futures shortly before the regular session opening. Gold rallied earlier in session to its highest level since September 11 when the Euro spiked to the upside and the U.S. Dollar Index broke to a three-year low. However, gold reached its high at nearly the same time the Euro did, and when the single currency began to retreat, it pulled up the dollar and pressured gold.
The price action in gold today is likely to be influenced by the Euro and the U.S. Dollar throughout the session. If you need help trading gold then lean on these currencies.
Daily Technical Analysis
The main trend is up according to the daily swing chart. It was reaffirmed when buyers took out the previous high at $1342.60. However, crossing back under the previous day’s close at $1337.10 may be signaling a major shift in momentum to down.
A close under $1337.10 will form a potentially bearish closing price reversal top. This could trigger the start of a 2 to 3 day correction, or a 50% retracement of the current rally.
On the downside, the first target is the major Fibonacci level at $1317.10.
Daily Technical Forecast
Based on the early trade, the direction of the gold market today is likely to be determined by trader reaction to yesterday’s close at $1337.10.
A sustained move under $1337.10 will indicate the presence of sellers. This could drive the market into a steep uptrending Gann angle at $1330.30. This angle has been guiding the market higher for 23 trading sessions. Taking out this angle could trigger an acceleration to the downside with potential targets at $1321.30 and $1317.10.
A sustained move over $1337.10 will signal the presence of buyers. This could drive gold into a long-term downtrending Gann angle at $1343.60. This is followed by today’s high at $1344.50. Overtaking this level with rising volume could fuel an eventual move into the September 8 main top at $1365.80.