Since the mid-December low, gold futures have seen a $105 rally, but now they are beginning to show signs of being exhausted and top-heavy heading into the second half of January.
We will examine a technical view of this market that will likely remain relevant for the next two sessions, using our bearish bias. The thirty-minute candlestick chart below shows gold’s movement since last week’s open.
Currently, the price is at the $1,329 area. Just below, marked in red at $1,327, is the 50% retracement of last week’s range, which in turn is just barely above the blue trend line connecting last week’s low to this week’s low at $1,326.50.
Because of the confluence of these two levels, we look at this area as a critical pivot zone today. If gold stays above the $1326.50-$1327 zone, we would look to potentially short with smaller size at the two upper trend lines. The first of these, shown in yellow, is at $1,336 and connects yesterday’s high to its lower high. The second, the orange trend line at the top of the chart, is currently at $1,344 and connects Monday’s high to Tuesday’s high this week.
Should this market break below the pivot zone, we have identified three potential targets to watch. First would be Friday’s low of $1320.80, marked in green, and then Thursday’s low of $1,316.10 low, marked in pink. The final level, although it would be a very aggressive and optimistic target, would be last week's low of $1308.90, which is marked in black at the bottom of the chart.
Each of these prior lows could act as support, so as each target is reached, our bearish bias would continue to decrease accordingly.
Today’s economic calendar, shown below, includes a variety of reports. The 8:30 a.m. EST releases should be relevant for this market; however, following 8:30 a.m, not much is on the list that would be expected to move gold.
Housing Starts 8:30 AM ET
Jobless Claims 8:30 AM ET
Philadelphia Fed Business Outlook Survey 8:30 AM ET
Bloomberg Consumer Comfort Index 9:45 AM ET
EIA Natural Gas Report 10:30 AM ET
EIA Petroleum Status Report 11:00 AM ET
3-Month Bill Announcement 11:00 AM ET
6-Month Bill Announcement 11:00 AM ET
2-Yr FRN Note Announcement 11:00 AM ET
2-Yr Note Announcement 11:00 AM ET
5-Yr Note Announcement 11:00 AM ET
7-Yr Note Announcement 11:00 AM ET
10-Yr TIPS Auction 1:00 PM ET
Fed Balance Sheet 4:30 PM ET
Money Supply 4:30 PM ET
Loretta Mester Speaks 6:05 PM ET