Stay in short positions in line with the ongoing downside movement. Last night, the COMEX Gold ended at USD1,228.70 and registered a USD4.20 loss. As a result, it charted a black candle with a longer lower shadow. Technically speaking, this lower shadow suggests that a potential rebound may occur in the later sessions. This is especially given that the 14-day RSI indicator is currently at the oversold level of 25.67 pts, ie below the 30-pt mark. Nevertheless, as long as no strong upside development is in sight, we make no change to our bearish view. Presently, the bears are still dominating market sentiment.

As the COMEX Gold continues moving southwards, we believe that opportunities are still leaning more towards the sellers. As such, it is best that traders maintain short positions with a trailing-stop set above the USD1,272 mark. This is to secure part of the trading profits. For the record, our short call was initially triggered on 16 May, following a firm breach below USD1,309.

We keep USD1,217, ie 9 May 2017’s low, as the immediate support. If this level is taken out, the following support is found at USD1,207, which was 10 Jul 2017’s low. Towards the upside, the immediate resistance is at USD1,238, which is located at 12 Dec 2017’s low. This is followed by the next resistance at USD1,272, ie the high of 9 Jul.

Source: RHB Securities Research - 20 Jul 2018