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Gold Futures - False Upside Breakout?

by Archer Financial Services | Aug 04, 2017
By Teddy Sloup
To learn more about Teddy, click here
 

Last week we talked about the importance for gold bulls to see a convincing close above $1260.  While gold has held steadily above $1260 for most of the last week, the fact that the market has not ripped higher with overwhelming confirmation should be slightly concerning in the near term.  With the December contract now the lead month, $1270-1275 is the near term “line in the sand” resistance level.  Although the Euro was able to breakout higher from long term resistance, the U.S. Dollar failed to do so against its corresponding support level.  It is reasonable to believe that potential fresh gold longs are on the sidelines eagerly awaiting further confirmation of a U.S. Dollar breakdown before establishing new positions.  Friday’s unemployment report is something traders will be paying close attention to as a potential catalyst for the next move.  Overall, the ‘tape’ remains strong as the market has been able to easily recover from the overnight selloffs which gold has witnessed all week long.  

Gold Futures - Monthly

Gold Chart
Chart from QST

With Friday’s non-farm report on deck we believe it is prudent to exercise patience and wait for a pullback towards crucial support at $1255 and 61.8% Fibonacci Retracement level, $1238.  Fighting the “tape” is always daunting, however being short gold with a tight stop is something we favor over the next few days.  If we’re wrong, so be it, but the risk is defined.  Only a close below $1255 neutralizes the bullish trend.   

My many years of trading futures markets does make a difference. Feel free to call or email me if you have any questions or would like to open an account.

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. Past results are not indicative of future results or performance. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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