Global Outlook

Gold Coiling For A Break-Out

Contributed by eResearch

February gold futures have been trading around a $1685-to-$1690 three-day value-range that began Thursday afternoon (Jan. 17) and continued on through the Monday holiday trading session (Jan. 21).

INSIDE DAYS

Additionally, the last two trading days are "inside days", where the range of the day was within the previous days range. "Inside days" are a form of balance. When a volitile market such as gold is contained within a tight range for several days, a significant move could follow the break from balance. It is possible that the market continues to rotate around this three-day value-range for the next day or so, but it is necessary to be prepared for a break from this balance.

DOWNSIDE MOVE

The market has found support at the $1685 level over the last three days. If the market gains acceptance below that $1685 level, it may trade lower back into Thursdays morning balance range of $1670 to $1674.

UPSIDE MOVE

If the market begins to gain acceptance above the three-day value-range, the first reference to watch for is Thursday's $1687.80 high. The market may find resistance at this level the first time up. If the market gains acceptance above Thursday's $1687.80 high, it may test the $1703.70 to $1708.50 gap.