Keep short, as the bears are in firm control. The COMEX Gold ended USD7.50 lower last night to USD1,214.90 and left a black candle. This weak performance has extended the downside movement and sent the commodity to its fresh low since 2017. As a result, the bullish bias we highlighted in 20 Jul’s “Bullish Engulfing” candlestick pattern is no longer in play. Overall, we believe the bears are in firm control of market sentiment. We also noted a USD1.65 decline in the 50-day SMA line to USD1,266.58, which implied a weak outlook, thereby enhancing our bearish view.

In line with the ongoing correction, we believe there are more opportunities for the sellers. Hence, it is best that traders maintain short positions with a trailing-stop pegged above the USD1,244 threshold – this is in order to lock in part of the trading profits. Recall that we made the short recommendation on 16 May following a firm breach below the USD1,309 mark.

We revise the immediate support to USD1,207, which is located at the low of 10 Jul 2017. If this level is taken out, the following support is found at USD1,198, or the low of 10 Mar 2017. Conversely, our immediate resistance is set at USD1,215, ie the low of 20 Jul’s Bullish Engulfing” pattern. This is followed by the USD1,244 resistance, which was 3 Jul’s low.

Source: RHB Securities Research - 3 Aug 2018