Colin Abrams
The dollar gold price is looking vulnerable again after giving a relief rally in recent weeks. We show its short-term target based on its price chart.
Gold ($): Breaking below support.
Recommendation: Traders sell short again.
Trend: Short and medium term down. Long term sideways.
(Daily)
n After a recent relief rally, the gold price is currently breaking down from a rising wedge (lines 1 and 2). It is also breaking below line 4 support.
n In addition, the short-term stochastic oscillator (on top) is now turning down from its overbought region, which is a bearish set-up.
n Therefore, traders sell short the gold price at current levels (its spot price was trading at $1 380 (R13 727) an ounce at the time of writing).
n Take half shorting profits at $1 342. From there, use a breaking of its prior one-day high as the trailing stop, to protect profits. It can drop further, for example $1 330 to $1 310.
n The initial stop loss is a closing price above $1 414. Once the price reaches $1 356, lower the stop to a close above $1 390, and take profits as advised above.
Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, please go to www.themarket.co.za.