Traders advised to stay in short positions in line with our downside view. Last night, the COMEX Gold dipped USD1.70 to USD1,209.50 and left a black candle. This shows that the session was led by sellers. In the daily chart above, we see that the commodity is still unable break above the USD1,215 resistance mark. This indicates that the bulls are still weak against the bears. In addition, note that the 14-day RSI indicator continues fluctuating below the 50-pt neutral level. Technically speaking, market sentiment is still weak thereby enhancing our downside view.

As we do not see any strong bullish development in the daily chart above, we believe that sellers are still in control of the COMEX Gold. Thus, it is best that traders maintain short positions. In order to secure part of the trading profits, we advise setting a trailing stop above the USD1,215 mark. This follows our initial short recommendation below USD1,309, on 16 May.

The immediate support is maintained at USD1,184, which is located near the low of 24 Aug. For the next support, look to USD1,162, ie 16 Aug’s low. Conversely, we keep the immediate resistance at USD1,215, or the low of 20 Jul’s “Bullish Engulfing” pattern. If this level is taken out, the following resistance is found at the USD1,239 threshold, which was 26 Jul’s high.

Source: RHB Securities Research - 29 Aug 2018