Keep short, in line with the strong downside movement. The COMEX Gold extended its retracement last night after the commodity registered a USD15.60 loss to USD1,180.50 and left a black candle. This was after hovering between a low of USD1,175.60 and high of USD1,197.20. Despite the oversold situation in the prior session, selling activities have continued. Technically speaking, the bears are strong and further downside movements are likely. We also want to highlight a USD2.44 decline in the 50-day SMA line, which points towards a weak outlook that enhances our bearish view.

In line with the strong downside movement, we believe there are more opportunities for the sellers. As such, traders are advised to stay in short positions with a new trailing-stop pegged above the USD1,215 mark. This is to secure part of the trading profits. Recall that our initial short recommendation was made on 16 May after the COMEX Gold’s price dropped firmly below the USD1,309 level.

We revise the immediate support to USD1,169.10, which was derived from the high of 24 Aug 2015. This is followed by the next support at the USD1,152.50 mark, or the low of 12 Dec 2016. On the flip side, our immediate resistance is now at USD1,200, ie near the high of 14 Aug. If this level is taken out, the next resistance is found at USD1,215 – this was the low of 20 Jul’s Bullish Engulfing” pattern.

Source: RHB Securities Research - 16 Aug 2018