Maintain long positions pending confirmation of the “Bearish Engulfing” formation. The COMEX Gold flashed the first possible sign of a price exhaustion signal in the latest session – as it charted a black candle that engulfed the previous session’s candle, forming a “Bearish Engulfing” formation. Session’s low and high were posted at USD1,284.60 and USD1,306.50, before ending USD9 weaker at USD1,292.20. The said possible price exhaustion signal came after the commodity experienced a relatively sharp upward move in the recent weeks, which saw its daily RSI reading crossing above overbought territory recently. To confirm the said price reversal formation, the latest session’s low needs to be breached decisively, until this happens, we are keeping our positive trading bias.

Until the “Bearish Engulfing” formation is confirmed, we continue to recommend traders keep to long positions that we initiated at the USD1,216 mark – this was 14 Nov’s closing level. For risk-management purposes, a stoploss can now be placed below the USD1,284.60 threshold.

Immediate support is revised to USD1,284.60, the latest session’s low. This is to be followed by USD1,267.40, the low of 21 Dec 2018. Conversely, immediate resistance is pegged at USD1,332.40, the high of 11 May 2018. This is followed by USD1,370.50, the high of 25 Jan 2018.

Source: RHB Securities Research - 7 Jan 2019