In line with the strong selling activities, it is best that traders maintain short positions. The COMEX Gold dived by USD20 on Monday to USD1,194.20, where it formed a long black candle that breached below the previous USD1,207 support. This shows a strong continuation of the bearish bias we saw in the prior session. As a result, the downside movement has been extended and the commodity is now situated at its fresh low since 2017. Overall, the 4-month downtrend remains firmly intact, thereby enhancing our bearish view.

The strong selling activities imply more potential for further corrections in the coming sessions. Traders are advised to stay in short positions, with a trailing-stop pegged above the USD1,240 threshold. This is to secure part of the trading profits. Recall that our short call was initially triggered below the USD1,309 mark on 16 May.

We revise the immediate support to USD1,182, which is near the low of 27 Jan 2017. If this level is taken out, the following support is set at USD1,158, or the low of 12 May 2017. On the flip side, our immediate resistance is pegged at USD1,215, ie the low of 20 Jul’s Bullish Engulfing” pattern. This is followed by the next resistance at the USD1,240 mark, which is near 26 Jul’s high.

Source: RHB Securities Research - 14 Aug 2018