Gold Futures: With gold now spotting a shooting star candle pattern (top reversal signal) and following through lower on its Wednesday losses, risk of further downside weakness is now pointing toward its minor support at the 1,098.95 level, its Feb. 2, 2010 low.
An acceleration through thelow will push the commodity further lower toward its long-term rising trend line, to its Jan. 28, 2010 low, at 1,072.34/1,073.95. We envisage a combination of these two levels to turn off the commodity on an initial test and possibly generate a corrective recovery higher.
However, the technical implication of a failure of that zone is that, first, a break and hold below the 1,073.95 swing low will put the commodity in a newly defined down trend with a pattern of lower highs and lower lows, and secondly, stronger supports at the 1,030.85/1,026.55 levels, its March 2008 high/Oct. 28, 2009 low, will be targeted.
Losses of these levels, if seen, will then create additional weakness toward its Oct. 2, 2009 low at 986.67. To reverse this view, gold must break and hold above the 1,125 level, thereby opening further upside risk toward its Jan. 20, 2010 high at 1,141.48, with a turn above there signaling further upside gains toward the 1,161.88 level, its Jan. 11, 2010 high, where a cap is expected. On the whole, gold now risks a decline toward its rising long-term trend line currently located at the 1,072.34 level.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces
for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.