Trailing stop triggered; Initiate short positions. The COMEX Gold saw a heavy selldown yesterday, losing USD36.40 to settle at USD1,838.50 – below the 20-day SMA line. The commodity started the session at USD1,875.40. The bulls were flushing out, with dumping seen towards the day low of USD1,828.20. Throughout the session, selling pressure was seen at every intraday rebound. Although the COMEX GOLD has been riding on a series of positive price actions lately, a weak closing below the 20-day SMA line signals the end of the recent counter-trend rebound. As the momentum indicator RSI is tilted downwards, coupled with the commodity price trend breaching the trailing stop, we shift to a negative trading bias.

Our previous long positions, initiated at USD1,818.90 or the closing level of 1 Dec, were closed out in the latest session after triggering the trailing stop at USD1,840. Concurrently, we initiate short positions. For riskmanagement purposes, a stop loss can be set above USD1,866.

Downside support will be at the low of 7 Dec or USD1,824.80, followed by USD1,810.50. On the upside, immediate resistance is seen at the high of 4 Dec, or USD1,852.70, followed by 8 Dec’s high of USD1,879.80.

Source: RHB Securities Research - 10 Dec 2020