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!
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