Short call remains intact as the downtrend is still firmly in play. Last night, the COMEX Gold rebounded by USD0.70 to USD1,213.30. During the session, the commodity rose to its intraday high of USD1,219.20 and tested the USD1,215 resistance. Despite the increase, we make no change to our bearish view. This is due to the absence of strong upside development in the daily chart above. At this juncture, the current downtrend is still firmly in play. The fact that the COMEX Gold is trading below the 50-day SMA line also points towards a weak outlook. This enhances our bearish view.

The current technical landscape suggests that the COMEX Gold has not found its bottom. At this juncture, we see it best that traders maintain short positions. In order to secure part of the trading profits, we recommend setting a trailing-stop above the USD1,240 threshold. Our short recommendation was initially triggered on 16 May, after the commodity dropped below USD1,309.

To the downside, we set the immediate support at USD1,207, which was the low of 10 Jul 2017. For the next support, look to USD1,198, ie 10 Mar 2017’s low. On the flip side, our immediate resistance is pegged at the USD1,215 mark, or the low of 20 Jul’s Bullish Engulfing” pattern. This is followed by the USD1,240 resistance, which is located near the high of 26 Jul.

Source: RHB Securities Research - 8 Aug 2018