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Gold is trading higher on Monday shortly before the regular session opening. The market is trading inside Friday’s range despite a dip in Treasury yields and a lower U.S. Dollar. The price action suggests investor indecision and impending volatility. The tight trading range and the lack of follow-through to the upside is a little surprising, but perhaps we’re in a headline driven market.
At 11:25 GMT, August Comex gold is trading $1412.70, up $12.50 or +0.89%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. A trade through $1415.50 will signal a resumption of the uptrend. Since there is no visible resistance, we could see an acceleration to the upside.
The main trend will change to down on a trade through $1323.60. This is highly unlikely. However, due to the prolonged move up in terms of price and time, traders should watch for the formation of a potentially bearish closing price reversal top. This chart pattern won’t change the trend to down, but it could allow longs to book profits, or give counter-trend traders an opportunity to enter on the short side.
Daily Technical Forecast
Based on the early price action, the direction of the August Comex gold futures contract the rest of the session is likely to be determined by trader reaction to Friday’s high at $1415.40.
Bullish Scenario
A sustained move over $1415.40 will indicate the presence of buyers. This could trigger an acceleration to the upside since the next target angle doesn’t come in until $1458.60.
Bearish Scenario
A sustained move under $1415.40 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the uptrending Gann angle at $1395.60. Look for an acceleration to the downside if this angle fails with the next target angle coming in at $1366.60.
Closing Price Reversal Top
Taking out $1415.40 then turning lower for the session will put the market in a positon to form a potentially bearish closing price reversal top. If confirmed, this chart pattern could lead to a 2 to 3 day counter-trend break or a 50% retracement of the rally from $1323.60.
This article was originally posted on FX Empire