Maintain short positions in line with the ongoing correction. Last night, the COMEX Gold registered a USD9.40 loss to USD1,189.30. As a result, a black candle was formed after the commodity hovered between a low of USD1,185.60 and high of USD1,198.70. Presently, we believe that the steep correction that started since April remains in play. Note that the 14-day RSI indicator is situating below the 50-pt neutral level, implying that market sentiment is weak. In addition, the fact that the COMEX Gold is trading firmly below the 50-day SMA line points towards a weak outlook. All these negative indicators enhance our downside view.

In the absence of any strong upside development, this indicates that the sellers are still dominating market sentiment. Hence, it is best that traders maintain short positions with a trailing-stop above the USD1,215 threshold. This is in order to lock in part of the trading profits. Recall that our short recommendation was initially made on 16 May following a strong downside development below USD1,309.

To the downside, the immediate support stays at USD1,169.10, or the high of 24 Aug 2015. The next support is pegged at USD1,152.50, which was derived from the low of 12 Dec 2016. Meanwhile, we set the immediate resistance at USD1,200, which is located near the high of 14 Aug. In the event that this level is taken out, our next resistance is set at the USD1,215 mark, ie the low of 20 Jul’s “Bullish Engulfing” pattern.

Source: RHB Securities Research - 24 Aug 2018