Trailing-stop triggered, initiate short positions. The COMEX Gold has seen an immediate-term trend change, falling USD36.60 to close at USD1,873.30 – breaching the USD1,875 trailing stop. It initially traded sideways after opening at USD1,910.50, but the bulls failed to cross above the USD1,912.30 day high – leading the bears to dump the COMEX Gold towards the USD1,866.70 day low before it rebounded mildly to settle at USD1,873.30. As it is breaking below the previous USD1,893.20 support to form a “lower low” bearish pattern, coupled with the RSI falling below the trendline, this indicates decelerating momentum – expect the negative momentum to follow through in the coming sessions to test the 20-day SMA line. Hence, we shift towards a negative trading bias.

We closed out the long positions initiated at USD1,791.80, or the closing level of 3 May, after the USD1,875 trailing-stop was triggered. Conversely, we initiate short positions at the closing level of 3 Jun, ie USD1,873.30. For risk-management purposes, the initial stop-loss level is set at USD1,912.30, or the high of 3 Jun.

The immediate support is revised to USD1,872.50 – 21 May’s low – followed by USD1,852.20, or 19 May’s low. On the upside, the nearest resistance is pegged at USD1,900, followed by USD1,912.30, ie the high of 3 Jun.

Source: RHB Securities Research - 4 Jun 2021