Maintain short positions as the correction could still be extended further. Based on the weekly chart above, we believe that the COMEX Gold is currently on a downward swing. Over the last four months, it has undergone a sharp correction and breached firmly below the 200-week SMA line. This is a strong downtrend. As a result, the COMEX Gold is now trading at its fresh low since 2017. In line with the ongoing bearish bias in the “Bearish Harami” candlestick patterns on 23 Feb and 30 Mar, we believe there is more potential for the correction to be extended further. Overall, the bears are dominating the market.

Hence, it is best that traders maintain short positions. In order to lock in part of the trading profits, we advise investors to set a trailing-stop above the USD1,215 threshold. This is in line with our initial short call on 16 May, following a firm breach below the USD1,309 mark.

Our immediate support is maintained at USD1,169.10, located at the high of 24 Aug 2015. The following support is set at the USD1,152.50 threshold, derived from the low of 12 Dec 2016. Meanwhile, we keep the immediate resistance at USD1,200, ie near the high of 14 Aug. The next resistance is pegged at the USD1,215 mark, or the low of 20 Jul’s Bullish Engulfing” pattern.

Source: RHB Securities Research - 17 Aug 2018