Gold futures are edging higher on Tuesday but remain inside last Friday’s wide range. The price action indicates investor indecision and impending volatility. Gold is being underpinned by a weaker U.S. Dollar, but gains are being limited by increased demand for higher risk assets.
The early price action indicates that gold is in a news driven market today. The key event is the Brexit negotiations. Traders should continue to monitor this situation throughout the session as it is expected to be the source of volatility.
At 13:51 GMT, April Comex gold is trading $1297.40, up $6.30 or +0.49%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, momentum has shifted to the upside. The market is in no position to change the main trend to up, but there is room for a rally into a 50% to 61.8% retracement zone. A trade through $1280.80 will signal a resumption of the downtrend.
The minor trend is up. This is helping to generate the upside momentum.
The main range is $1209.30 to $1349.80. Its retracement zone at $1270.60 to $1263.00 is the primary downside target.
The short-term range is $1349.80 to $1280.80. Its retracement zone at $1315.30 to $1323.40 is the primary upside target. Since the main trend is down, sellers are likely to come in on a test of this zone.
Daily Technical Forecast
Based on the early price action, the direction of the April Comex gold futures contract is likely to be determined by trader reaction to the downtrending Gann angle at $1293.80.
A sustained move over the downtrending Gann angle at $1293.80 will indicate the presence of buyers. The daily chart indicates there is plenty of room to the upside with the next target coming in at $1315.30. However, in order to get there today, buyers will need a catalyst.
A sustained move under $1293.80 will signal the presence of sellers. This could lead to a quick break into an uptrending Gann angle at $1288.30. Watch for a technical bounce on the first test of this angle. If it fails then look for the selling to extend into the minor bottom at $1280.80, followed by the major 50% level at $1279.60.
This article was originally posted on FX Empire