Gold has been in an extreme compression pattern for the past three weeks. The market action has lent itself to several winning trading signals and an abundance of green pips. Kudos to all that have benefited from the trades, and for those who haven’t be sure to check out the signals page for real-time ideas for engaging global bullion.
Today’s market dynamic looks to be more of the same for gold: more rotation between important support and resistance levels.
December Gold Futures-Technical Outlook
On the daily timeframe, the price action of December gold futures is best described as choppy. Barring any developments that drive investors towards the safe-havens, gold may stay range bound until the December futures contract completes rollover.
December Gold Futures, Daily Chart
A few key technical levels for this market:
Resistance(1): 20 Day EMA, 1280.4
Resistance(2): 38% retracement of current wave, 1280.8
Resistance(3): Bollinger MP, 1281.3
Support(1): Daily SMA, 1279.3
Support(2): October double bottom, 1262.8-1263.8
In addition, we have another Bollinger MP/Daily SMA crossover. This is the third one in the last month, a signal of sustained noncommittal price action.
From a tactical standpoint, successfully trading whipsaw markets can be a monumental challenge. Today’s range has extended past both of Monday’s extremes indicating indecisive sentiment among traders and investors.
For now, it is best to sit and wait for macro resistance levels to come into play. Heavily traded areas of support and resistance are likely to hold until we see market fundamentals change. As we move closer to the U.S. Federal Reserve’s December meeting, a directional run in pricing will become more probable.
Until then, stay tuned to FX Leaders for analysis and trade ideas for success in the global gold markets.