Whalesbook
Gold Outlook Weakens as Resistance Looms
Gold prices on the Multi Commodity Exchange (MCX) are poised for a potential decline as they approach strong resistance levels, according to Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities. Trivedi forecasts that the precious metal will struggle to break past the ₹1,37,800 to ₹1,38,000 range on January 9, 2025. This outlook suggests a 'sell-on-rise' strategy, where traders are advised to offload positions as prices climb within this resistance zone.
Technical Indicators Point to Downside
The commodity's technical setup paints a bearish picture for the short term. Gold February futures are trading near ₹1,37,800, showing a sharp pullback from higher levels. Technical indicators, including Exponential Moving Averages (EMAs), suggest that the immediate upward momentum is faltering. The EMA 8 has failed to sustain above the EMA 21, signaling a weak short-term structure.
Bollinger Bands and RSI Signals
Gold has retreated towards the mid-Bollinger band after testing lower points, but the upper band near ₹1,38,000 continues to act as a formidable barrier. This suggests that further upside is likely to be capped in the near future. The Relative Strength Index (RSI) is hovering around 60, indicating a short-term recovery but not strong enough to confirm a trend reversal. This level often precedes consolidation or pullbacks when prices near resistance.
MACD and Volume Analysis
The Moving Average Convergence Divergence (MACD) indicator has shown a brief positive crossover, but the flattening histogram bars signal waning bullish momentum. This increases the probability of a price reversal from current higher levels. Furthermore, the recent recovery has been accompanied by moderate volumes, while open interest remains soft. This indicates a lack of strong bullish accumulation, making the move prone to reversal.
Trading Strategy Recommendation
For intraday traders, the recommendation is clear: sell on rise. The strategy advocates for selling gold within the ₹1,37,800 – ₹1,38,000 range. A strict stop-loss should be maintained at ₹1,39,100, with a downside target set at ₹1,36,400. The bias remains bearish as long as prices trade below ₹1,38,000, with any significant strength only expected above ₹1,39,100.