Short call remains intact, as the retracement is still in play. The COMEX Gold ended at USD1,230 last night and posted a USD0.30 gain. A “Doji” candlestick pattern was formed, which implied the session was an indecisive one. At this juncture, there is no change to our bearish view. This is because, despite the appearance of a bullish bias in 27 Jul’s reversal “Bullish Engulfing” candlestick pattern, no strong positive follow-through has been sighted. Technically speaking, this implies that the bulls are still unable to wrest control from the bears. Overall, opportunities are still leaning more towards the sellers.

As the current technical landscape suggests that the retracement is still in play, we recommend traders to maintain short positions, with a trailing-stop pegged above the USD1,272 mark. This is in order to lock in part of the trading profits. Recall that our short call was initially made on 16 May, following a firm breach below the USD1,309 threshold.

Based on the current chart, our immediate support is maintained at USD1,217, which was the low of 9 May 2017. The next support is pegged at USD1,207, or the low of 10 Jul 2017. Towards the upside, we keep the immediate resistance at USD1,238, which is located at 12 Dec 2017’s low. For the next resistance, look to the USD1,272 threshold, ie 9 Jul’s high.

Source: RHB Securities Research - 25 Jul 2018