Traders are advised to stay in short positions in line with ongoing retracement. On Monday, the COMEX Gold dropped USD1.31 to USD1,247.10, and extended the correction to a new low since 2017. A black candle was formed after the commodity hovered between a low of USD1,246.10 and high of USD1,260.60. This shows strong selling activities, which have negated the reversal movement that we detected in 29 Jun’s “Bullish Engulfing” candlestick pattern. As a result, the 50-day SMA line has also dropped by USD1.82 to USD1,299.71. This implies a weak outlook, thereby enhancing our bearish view.

In line with the ongoing retracement, we believe that opportunities are leaning more towards the sellers. As such, traders are advised to maintain short positions. In order to lock in some of the trading profits, we recommend setting a trailing-stop above the USD1,286 threshold. This is in line with our initial short call on 16 May after the COMEX Gold dipped below USD1,309.

We keep the immediate support at USD1,238, which was the low of 12 Dec 2017. If this level is taken out, the following support is found at USD1,217, or the low of 9 May 2017. Conversely, the immediate resistance is maintained at USD1,263, which is located at the low of 27 Oct 2017. This is followed by the USD1,286 resistance mark, which was derived from the low of 21 May.

Source: RHB Securities Research - 3 Jul 2018