The daily chart for the December futures contract for gold continues to develop an ever more bearish tone, and despite several attempts to rally in the latter part of July, is now starting to break down and taking on an ominous tone. Of particular importance are the two support and resistance levels as denoted with the red and blue dashed lines on the accumulation and distribution indicator.
The first of these, the red line at $1240 per ounce was in an area tested several times, with each attempt then failing to break through and the metal then duly moving lower. More significantly still, is the price action today with the gold contract opening gapped down and below the second level, which until today had been acting as a potential support platform in the $1228 per ounce area. With this level having now been breached, this is adding yet more downwards pressure, and as we can see at the bottom of the chart, the Quantum trend monitor remains steadfastly red, and has done throughout this bearish trend which began in late April.
Moving to the weekly chart and applying the camarilla levels indicator, here we can see the price action is now trading below the S4 level, and should the week end close remain below this level, we may see a continuation of the current bearish trend, and a potential move to re-test the $1220 per ounce price point once again.
As always, until we see sustained and climatic buying volumes the medium bearish trend remains in place.
By Anna Coulling
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