Maintain long positions despite another price rejection at the immediate resistance. The COMEX Gold formed a black candle in the latest session – as it again saw a price rejection from the immediate resistance of USD1,215 and the 50-day SMA line (current reading: USD1,211.3). At one point during the session, the precious metal reached a high of USD1,215.8, before the bears kicked in and sent it to a low of USD1,196, before ending at USD1,201.3, indicating a decline of USD10. Nevertheless, in our observation, the negative session has not invalidated the bias for it to extend its rebound – which started from the low of USD1,162 on 16 Aug. Additionally, the sideways price pattern that developed over the past four weeks remains intact – suggesting that the risk is still low for the return of the YTD steep retracement, for now. Hence, we maintain our near-term positive trading bias.

As we continue to see that the commodity’s overall rebound is still not at the risk of being invalidated – as the immediate support of USD1,184 is still holding – we continue to advise traders to keep their long positions. Recall that we initiated these positions after the commodity breached above the USD1,207.60 mark on 12 Sep. For risk management purposes, a stop-loss can be set at below the USD1,184 threshold.

Towards the downside, immediate support is pegged at USD1,184, which was the low of 24 Aug. The second support is at the USD1,162 critical support registered on 16 Aug – this was also the YTD low. Towards the upside, the immediate resistance is at USD1,215, or the low of 20 Jul. This is followed by the USD1,239 level, ie 26 Jul’s high.

Source: RHB Securities Research - 24 Sept 2018