Stay in short positions in line with the ongoing correction. The COMEX Gold climbed USD3.90 to USD1,265.30 last night, and left a white candle that breached above the previous USD1,263 resistance level. Nevertheless, this does negate our negative view, given that no firm upside movement has been sighted yet. A further rise in the price performance is needed, in order to confirm the positive momentum in the “Bullish Harami” candlestick pattern on 4 Jul. At this juncture, opportunities are still leaning more towards the sellers. Our bearish view is also supported by the fact that the 14-day RSI indicator is situated below the 50-pt neutral level, which implies that market strength is weak.

In the absence of any strong upside development, this implies that the correction is still in play. Technically speaking, it is best that traders maintain short positions. In order to secure part of the trading profits, we recommend setting a trailing-stop above the USD1,286 mark. This is in line with our initial short call on 16 May, following a firm breach below the USD1,309 threshold.

Our immediate support is set at USD1,263, which was obtained from the low of 27 Oct 2017. If this level is taken out, the following support is found at USD1,238, or the low of 12 Dec 2017. On the flip side, we set the immediate resistance at USD1,286, which is located at the low of 21 May. The following resistance is pegged at the USD1,332 mark, ie 27 Apr 2018’s high.

Source: RHB Securities Research - 10 Jul 2018