RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Metals

S-T Gold Failure Could Lead to L-T Correction or Reversal

Posted 02/04/2019 9:42AM CT | RJO Market Insights

The market’s failure this morning below our short-term risk parameter defined by 30-Jan’s 1313.5 low confirms a bearish divergence in short-term momentum that leaves Thur’s 1331.1 high in its wake as one of developing importance and the likely end of the portion of the recent uptrend from 24-Jan’s 1275.3 low.  Per such this 1331.1 high serves as our new short-term risk parameter from which non-bullish decisions like long-covers and cautious bearish punts can now be objectively based and managed.

The 240-min chart below also shows the 50% (1303.2) and 61.8% (1296.6) retraces of late-Jan’s 1275.3 – 1331.1 rally cutting across around the same area as former 1295-to-1300-area resistance from the first-half of Jan that would be expected to hold as new support IF the exposed setback is “just” another correction within a broader bullish count.

Gold 240 Minute Chart

Gold Daily Chart

From a longer-term perspective the market has yet to fail below 24-Jan’s 1275.3 next larger-degree corrective low and our key long-term risk parameter it needs to break to, in fact, break the longer-term uptrend from even 13-Nov’s 1196.6 low, let alone the even broader bull from 16Aug18’s 1167.1 low.  Indeed, this relapse could easily be a (4th-Wave) correction within the major uptrend that still has plenty of legs left in it.  But even such a correction could easily span a month and retrace to the 1275-to-1280-area.  Nonetheless, the market’s return to the upper-quarter of the past 2-1/2-year range that has repelled every other assault makes for a slippery slope for bulls “up here”.  In effect the short-term trend is down while the long-term trend remains arguably up.

These issues considered, shorter-term traders with tighter risk profiles have been advised to neutralize bullish exposure and are even OK to take a cautious punt from the bear side with a recovery above 1331.1 required to negate this call and warrant its cover.  Long-term players are advised to pare bullish exposure to more conservative levels and jettison the position altogether on a failure below 1275.3.

Gold Weekly Chart

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.
Read More