Gold On Rallies For A Downside Target At 26,000 Levels, Selling Recommen
CommodityOnline | May 02, 2014 07:12AM ET
MUMBAI: In the above monthly price chart of Gold we have clearly seen that prices are in bearish mode after making a high of 35,040 levels in August 2013. In year 2013 Gold prices had corrected around 7.90% and in year 2014 from Jan 2014 to till date price had moved only 0.40%. In year 2014 prices had made a low of 28,119 levels and a high of 30,737 levels.
As per the monthly prices pattern it formed a “Lower top Lower bottom formation” and also breached the down trend line and currently trading below it. If we look at the volumes, it’s in a declining mode from the year Aug 2011 to till date, which is not supportive for the prices.
Technically speaking prices are trading below its 5 and 20 month EMA (Exponential Moving Average) and sloping southwards, which is negative signal for the prices in coming months. 14 month RSI is also falling and current reading stands at 53, indicating there may be room for further downside. MACD is also in negative zone which is also negative for prices.
We expect Gold price to find support in the range of 26,500 – 26,000 levels, Trading consistently below 26,000 levels would lead towards the support at 24,000 ($1,050) levels and then finally towards the major support of 20,000 ($ 900) levels.
Resistance is now observed in the range of 33,500 – 34,000 levels. Trading consistently above 34,000 ($ 1430) levels would lead towards the strong resistance at 39,000 - 39,500 ($ 1660) levels.
Due to multiple factors indicating bearishness - we are recommending to sell Gold on rallies for a downside target of 26,000 levels.
However, on a lower side around 24,000 levels appears to be strong support level and price should bounce from these levels. Hence one can initiate a long position at these levels.
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