A Breakout Setup In Gold

Posted Friday, February 23, 2018 by
Shain Vernier • 1 min read

Is has been a quiet Friday session in the gold markets. In the wake of another green open on Wall Street, gold is rotating moderately to the bear within Thursday’s extremes. Thus far, April bullion futures have posted a 65 tick range just beneath robust technical resistance. It appears that a directional breakout scenario above these levels may be on the horizon.

There is a lack of fundamental market drivers scheduled for today’s session. Aside from speeches given by U.S. Federal Reserve (FED) members, the only other catalyst for participation is the U.S. CFTC Net Gold positions report due out at 3:30 PM EST.

With a bit of luck, our breakout will develop well before the CFTC release.

Gold Technical Outlook

In reference to the April futures contract, daily volumes have already exceeded a traded volume of 100,000 lots. Most of the action came during the overnight, but the daily range is poised to open up as the day unfolds.

April Gold Futures, Daily Chart

Topside resistance is the key to this market today. Here are the levels to watch:

  • Resistance(1): Bollinger MP, 1335.0
  • Resistance(2): 20 Day EMA, 1335.7
  • Resistance(3): Daily SMA, 1335.9

Bottom Line: After yesterday’s proximity test of resistance, gold appears ready to break out to the bull. Buys from just over the Thursday high from 1334.5 are a good way to play bullish order flow for 8-15 ticks.

This is a scalp, so keep the stop losses tight and look for immediate, positive price action after entry.

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