Gold: Longer Term Bullish

Technicals | Dec 14 2023

Bottom Line 13/12/23

Daily Trend: Down
Weekly Trend: Up
Monthly Trend: Down
Support Levels:  $1800 (zone) / $1700 (zone)
Resistance Levels: $2153 / $2237 / $2309 (all-time high) (Feb 2024 contract)

All prices US$/oz Comex futures.

Technical Discussion

Reasons to remain neutral (bullish optimism remains medium to longer term):
→ bullish decade-long cup and handle pattern is running out of time to trigger
→ The final handle aspect of the pattern has been 3 years in the making yet may finally be close to completion
→ watching the $1800-$1700 zone to continue to bring out buyers

The title of our last gold chart back in November was ‘Is Gold finally ready to shine‘ ?? Well off our trade trigger at $2039.80, it certainly looked like it was going to, yet it failed miserably to break clear of the longer-term lowering line of resistance. As you know this lowering line of resistance forms the upper boundaries of the handle of our larger multi-year Cup and Handle pattern. A pattern that we continue believe will eventually break out in bullish fashion and start heading toward $3000 USD which is the pattern’s target post any successful breakout move.

Yet that rejection price bar (see chart and video) on the 4th of December was an absolute shocker. Tagging an intraday high of $2152 before closing out the session over $100.00 USD below this intraday high. Wide-ranging price bars that close toward their lows on high volume are bearish. And it generally means, on a high probability basis, that the follow-up sessions are going to be negative as well. And this is exactly what we have witnessed thus far.

So price is back hugging the 200-Day MA right at this juncture and to this point in time a buyer response has not been forthcoming. We are back to oversold on the dailies though so some nibbles from the precious metals perma bulls may be close to hand post this cleanout phase. What we do not want to see is volume picking up again with price continuing to head south. Outside the rejection bar, the downside follow-through has not been on high volume at all so this is encouraging for now. So hopefully this has just been a cleanout to force the weaker hands to exit, yet we will just have to wait and see. We continue to be longer-term bullish on the metal yet price action is clearly continuing to test our resolve!

Trading Strategy

We remain long at $2039.80 with initial stops placed at $1955.50. These are new contract levels based on the rollover to the February 2024 contract. Watching closely!

Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).

This report may contain advice that has been prepared by The Chartist Pty Ltd (ABN 40 641 323 051). The Chartist Pty Ltd is a Corporate Authorised Representative (CAR No. 1282007) of Shartru Wealth Management Pty Ltd ABN 46 158 536 871, AFSL 422409. Any advice is considered general advice and has been prepared without taking into account your objectives, financial situation or needs. Because of that, before acting on this advice you should therefore consider the appropriateness of the advice having regard to your situation and your own objectives, financial situation and needs. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. If the advice relates to the acquisition, or possible acquisition, of a product (other than a security e.g. a CFD) then the client should obtain the relevant Product Disclosure Document and consider it before making any decision about whether to acquire the product. Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.

Risk Disclosure Statement

THE RISK OF LOSS IN TRADING SECURITIES AND LEVERAGED INSTRUMENTS I.E. DERIVATIVES, SUCH AS FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER YOUR OBJECTIVES, FINANCIAL SITUATION, NEEDS AND ANY OTHER RELEVANT PERSONAL CIRCUMSTANCES TO DETERMINE WHETHER SUCH TRADING IS SUITABLE FOR YOU. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIGNIFICANT ASPECTS OF SECURITIES AND DERIVATIVES MARKETS. THEREFORE, YOU SHOULD CONSULT YOUR FINANCIAL ADVISOR OR ACCOUNTANT TO DETERMINE WHETHER TRADING IN SECURITIES AND DERIVATIVES PRODUCTS IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CIRCUMSTANCES.

Technical limitations If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Share on FacebookTweet about this on TwitterShare on LinkedIn

Click to view our Glossary of Financial Terms