Gold futures are inching lower early Monday with traders keeping a close eye on the movement in U.S. Treasury yields and the U.S. Dollar. Japan is on bank holiday so trading liquidity is a little below average. Gold traders are also watching the early action in the stock market since a new round of negotiations between the United States and China is set to begin later this week. Last week, stock market volatility fueled by negative developments over U.S.-China trade relations drove gold lower then higher last week.
At 02:25 GMT, April Comex gold futures are trading $1317.40, down $1.10 or -0.08%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. Last week’s weakness had no effect on the trend indicator. A trade through $1331.10 will signal a resumption of the uptrend. The main trend will change to down on a move through $1281.50.
The minor trend is also up. A new higher minor bottom was formed at $1306.40. A trade through this level will change the minor trend to down. This will shift momentum to the downside.
Gold is currently trading inside a major retracement zone at $1293.60 to $1319.70. This zone is controlling the longer-term direction of the market.
The main range is $1281.50 to $1331.10. Its retracement zone at $1306.30 to $1300.40 is a support zone target. Since the main trend is up, buyers could show up on a test of this zone.
The new short-term range is $1331.10 to $1306.40. Its 50% level or pivot is at $1318.80. This level forms a resistance cluster with the major Fibonacci level at $1319.70.
Daily Technical Forecast
Based on the early price action, the direction of the April Comex gold market the rest of the session is likely to be determined by trader reaction to the downtrending Gann angle at $1317.10.
A sustained move over $1317.10 will indicate the presence of buyers. This could trigger a quick move into $1318.80 then $1319.70. Taking out the latter could lead to an acceleration to the upside with the next downtrending target angle coming in at $1324.10. Overtaking this angle could lead to a test of the next downtrending Gann angle at $1327.60. This is the last potential resistance angle before the $1331.10 main top.
A sustained move under $1317.10 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside. The daily chart indicates there is plenty of room to the downside with the next targets the minor bottom at $1306.40, the main 50% level at $1306.30 and the uptrending Gann angle at $1305.50.
If $1305.50 fails then look for the selling to possibly extend into the main Fibonacci level at $1300.40.
Basically, look for a strong downside bias to develop on a move under $1317.10 and for a strong upside bias to develop on a move over $1319.70.
Please let us know what you think in the comments below.
This article was originally posted on FX Empire
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