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Gold Knocking on Key Resistance, Defines New S-T Bull Risk

Posted 06/05/2019 7:33AM CT | RJO Market Insights

Today’s continued rally above the past couple days’ resistance around 1334 reaffirms the developing uptrend and our bullish count introduced in 30-May’s Technical Blog and leaves yesterday’s 1324.7 low in its wake as the latest smaller-degree corrective low the market is now required to fail below to confirm a bearish divergence in short-term momentum, stem the rally and expose at least an interim correction lower.  In this regard this 1324.7 level becomes our new short-term risk parameter from which a bullish policy and exposure can be objectively rebased and managed.

Gold 240 Minute Chart

 

Gold Daily Chart

This tight but objective risk parameter may come in handy given the market’s assault on the extreme upper recesses of a 3-YEAR range that has repelled all previous rallies.  This key resistance ranges from 20Feb19’s 1349.8 high to Jul’16’s 1377.5 high.  As recently discussed, Feb-May’s clear 3-wave and thus corrective sell-off attempt from 1349.8 to 1267.3 warns of a resumption of Aug-Feb’s uptrend to new highs above 1350.  Whether the bull has the legs thereafter to continue a major breakout above 1377 would remain to be seen.  What is clear and effective however are recent corrective lows like 1324.7 that the market would be expected to sustain trendy, impulsive gains above f the market has something broader to the bull side in store.

Gold Weekly Chart

 

From a very long-term perspective, we would remind traders of a major, multi-year BASE/reversal count that remains intact from Feb’16’s bullish divergence in momentum above Oct’15’s 1189 corrective high that defined Dec’15’s 1045.4 low as THE END of the secular 5-wave decline from Sep’11’s 1920 al-time high.  Following Dec’15 – Jul’16’s impulsive rally, the market’s labored, lateral and (B- or 2nd-Wave) corrective price action has done nothing but reinforce this major, multi-year base/reversal process that warns of an eventual bust-out above Jul16t’s 1377 high to indeterminable heights thereafter.

These issues considered, a bullish policy and longs from 1308 OB recommended in 31-May’s Trading Strategies Blog remain advised with a failure below 1324.7 sufficient to threaten this bullish count enough to warrant its cover and circumvent the depths unknown of just a slightly larger-degree correction or another steeper intra-range relapse.  In lieu of such sub-1324.7 weakness, further and possibly accelerated gains above 1350 are expected.

Gold Monthly Chart

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