Matt Simpson, CFTe, MSTA
CityIndex
Since breaking the trendline from the 2012 highs and at its highest level since April,Gold has now stalled. Is there potential for a 'fakeout'?
Whilst Gold had risen on the back of Geo-political tension within Iraq, it has failed to keep up momentum and now awaits further direction. Also the fact it is failing to continue to take advantage of a weaker USD does raise questions to its ability to continue the bullish run from the $1240 lows.
Yesterday produced a Bearish Pinbar (Similar to Shooting Star but smaller body) and failed to close above $1331 resistance to suggest a hesitancy to break higher, for now at least.
We do have potential to pull back to the broken trendline but we also need to allow for some market noise around this level before seeking bullish setups above the broken trendline.
A break below the trendline could see intraday targets around $1305 and of course $1300 - until we get beneath here then I'll not become too excited in the bear camp.
Further suggestion of a retracement come from the intraday volume where we can see higher-volume spikes with narrow-bodies candles (with high wicks) to suggest 'offloading' of long positions.
Whilst I suspect a retracement, on a medium-term I suspect we'll see further gains looking at the COTS data, as large traders have increased their Net Long exposure which is the highest in 3-month.
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