Maintain short positions in line with our bearish view. The COMEX Gold dropped USD5.90 last night to USD1,230.50 and left a black candle. This showed that the session was led by the sellers. We do not see any strong positive follow-through appearing – this is despite the appearance of 20 Jul’s reversal “Bullish Engulfing” candlestick pattern. Technically speaking, we believe the buyers are still unable to wrest control from the sellers. In addition, the 14-day RSI indicator’s fluctuation below the 50-pt neutral level implies that market sentiment is weak – this enhances our bearish view.

The current technical landscape suggests that opportunities are still leaning towards the sellers. As such, it is best that traders maintain short positions with a new trailing-stop above the USD1,244 mark. This is in order to secure part of the trading profits. Recall that our initial short call was triggered on 16 May following a firm breach below the USD1,309 threshold.

We revise the immediate support to USD1,215, ie 20 Jul’s Bullish Engulfing” pattern. The following support is maintained at the USD1,207 mark, which was the low of 10 Jul 2017. On the flip side, our immediate resistance is now at USD1,244, or the low of 3 Jul. This is followed by the USD1,272 resistance, which was derived from 9 Jul’s high.

Source: RHB Securities Research - 27 Jul 2018