1300.0 Is Driving A Very Tight Gold Market

For the last two weeks, the gold market has entered a consolidation phase. Whipsaw trading conditions have been the norm, featuring limited daily ranges. Given the current geopolitical and central banking influences it is no surprise that investors are non-committal toward bullion. Nonetheless, one has to wonder when this market is going to open up.

In a trade recommendation from last Friday, I outlined a bullish scalping plan for August gold futures. The trade did not perform extremely well, but did produce a fast eight tick profit. If you got in on the action, nicely done. If not, no worries — there are plenty of great opportunities on the way as the trading week presses on.

Gold Technicals

At press time, August gold futures are hovering just above the 1300.0 handle. 1300.0 has attracted traders and investors for the last eight sessions. Will bullion ever leave this area?

The daily time frame gives us a good look at the level of consolidation. Price is tightening up between two important support and resistance levels. For now it appears that this market is preparing for a directional move, possibly after the FED issues its commentary on Wednesday.

Here are the levels to watch for the rest of today’s session:

• Resistance(1): 20 Day EMA, 1304.6
• Resistance(2): Bollinger MP, 1306.1
• Support(1): Daily SMA, 1301.0
• Support(2): Psyche Level, 1300.0

Overview: Rotational markets can be a challenge to trade. Technical levels are often invalid, as price action is inconsistent. The current location of price between the Bollinger MP and Daily SMA is a strong sign of consolidation. Traders and investors appear happy to let this market digest yesterday’s U.S./North Korea agreement and the coming FED decision before jumping in with both feet.

For now, a great number of traders are happy on the sidelines. Perhaps the coming hours will give us a break in the bullion markets and an opportunity to capitalize on some much-needed action.