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Gold Price Futures (GC) Technical Analysis – Upside Bias Developing, but Weak Volume Preventing Breakout

James Hyerczyk

Gold futures are trading nearly flat late Tuesday with gains stifled by demand for risky assets and a stronger dollar. The market may have been underpinned by slightly weaker U.S. Treasury yields. Fundamentally, the market was pressured by stronger-than-expected U.S. economic data, but may have been supported by concerns over the lack of details about the U.S.-China trade deal and renewed concerns over Brexit.

At 21:40 GMT, February Comex gold is trading $1481.10, up $0.60 or +0.03%.

Daily February Comex Gold

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, upside momentum has been stalled since the formation of the closing price reversal top at $1491.60 on December 12.

A trade through $1491.60 will signal a resumption of the uptrend. The main trend will change to down on a move through the last swing bottom at $1463.00.

The main range is $1525.20 to $1453.10. Its retracement zone at $1489.20 to $1497.70 is resistance. This zone stopped the rally at $1489.90 on December 4 and at $1491.60 on December 12. It is controlling the near-term direction of the market.

The short-term range is $1453.10 to $1491.60. Its retracement zone at $1472.40 to $1467.80 is support.

Short-Term Outlook

February Comex gold has been trading between a pair of retracement zones for several weeks. It’s also formed two higher bottoms and two higher tops. This indicates there is a growing upside bias. The longer the market remains inside the elongated trading range, the bigger the breakout move.

The biggest concern is the low volume. Without rising volume, a breakout to the upside is likely to fail. For that matter, the same goes for a break down under support.

What we’d like to see is a breakout move that is fueled by more than just buy stops or sell stops.

This article was originally posted on FX Empire