Weekly Commodities Update: Gold |
By Jonah S. Ford
A chart analysis of the Comex Gold futures reveals the week ahead may prove to be a pivotal one. Autochartist has identified multiple support lines on the Key Level indicator platform. These key levels are all converging between $1,700 and $1,708 per ounce, which lies just beneath Friday’s trading range.
Gold has already rebounded from this support zone several times in recent rally attempts. The rallies have met resistance as broader commodities and equity markets continue to find solid footing amidst the record-setting volatility.
The failed rallies have set up an intermediate term trading range in the form of Pennant chart pattern, illustrated here on the 30-minute time interval. The pattern is a near textbook image of a classic pennant, with well defined support and resistance levels. The internal readings show a ranking of 8 bars for Uniformity, Initial Trend, and overall Quality, with a 9-bar Clarity score. Gold held the support in Friday’s session and is now poised near the apex of the pennant, which encourages the prospects of a breakout in early in this week’s trading.
Because the bottom of the pennant coincides with the key support levels across multiple time frames, additional strength is given to the technical outlook. A breach of this level resulting in a breakout signal to the downside would be seen as a failure of the key $1,700 per ounce level and likely trigger sell-stops. This could establish a strongly bearish move in the short term as momentum traders add short positions on the perceived weakness.
A resurgence of strength from the bottom of the pennant to a price breakout above $1,720 would be a solid confirmation that the support remains intact, and could establish the $1,710 level as a definitive base for the next major rally back above $1,800 per ounce. Given the clarity of the pennant on the half-hour chart, Autochartist is likely to paint a clear forecast for a new range once the direction of the breakout has been established. This is a great pattern to keep an eye on as the next move unfolds.
About the author: Autochartist
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