“Bearish Harami” is for real; initiate short positions. The Comex Gold gained USD1.50 to close at USD1,282.90 – this was after trading ranged between USD1,279.10 and USD1,284.40. The recent sessions’ weak price performance, has in our view confirmed the 14 May’s “Bearish Harami” formation. This implies the breakout from the downtrend line (as drawn in the chart) is a fake one. By extension, chances are high that the previously mentioned multi-week correction phase that started from the high of USD1,349.80 on 20 Feb is still incomplete ie the low is still not in place. Hence, the trading bias is negative for now.

Our previous long positions, initiated at USD1,290.20 on 1 May were closed out on 17 May at breakeven. On the bias that that the correction phase still has legs to go further, we initiated short positions at USD1,281.40, the which was the closing level of 17 May. A stop-loss can be placed at USD1,330.80.

Immediate support is set at USD1,267.90, or the low of 23 Apr. This is followed by USD1,236.50, ie the low of 14 Dec 2018. Moving up, the immediate resistance is set at USD1,330.80, which was the high of 25 Mar. This is followed by USD1,349.80, or the high of 20 Feb.

Source: RHB Securities Research - 21 May 2019