Spot gold breaks 2021 low (yet gold futures hold above it)
Many traders across Asia will be looking at their spot gold charts today after its solid close beneath the 2021 low. Such moves can spark another round of selling as investors flea for the exit.
But before gold speculators decide to go 'all in' at these lows on spot gold prices, I suggest you also look at the gold futures chart if trading over the near-term (such as intraday timeframes).
Whilst spot gold (left chart) closed to its lowest level since April 2020, the futures chart has managed to hold above its respective 2021 low andits June 2020 low. Prices are coiling within a small pennant, so perhaps we'll see it break lower in due course, in which case spot gold prices may continue lower. But also note that both markets are holding above their weekly S3 pivots.
Therefore, given the significance of these levels I am leaning towards a retracement higher for futures and spot gold prices before its bearish trend resumes.
- Countertrend trends could seek bullish setups if momentum turns higher (seek a series of bullish hammers, bullish engulfing candle etc) and aim for the spot 2021 low.
- Or bears could seek evidence of a swing high below the 2021 lows, with the aim to rejoin the bearish trend at higher prices.
- But if futures and spot move lower, bears clearly have the upper hand and the trend is assumes to have resumed.
But whatever you decide to do, I suggest watching spot and futures markets in tandem to make a more informed decision. Good luck!
But before gold speculators decide to go 'all in' at these lows on spot gold prices, I suggest you also look at the gold futures chart if trading over the near-term (such as intraday timeframes).
Whilst spot gold (left chart) closed to its lowest level since April 2020, the futures chart has managed to hold above its respective 2021 low andits June 2020 low. Prices are coiling within a small pennant, so perhaps we'll see it break lower in due course, in which case spot gold prices may continue lower. But also note that both markets are holding above their weekly S3 pivots.
Therefore, given the significance of these levels I am leaning towards a retracement higher for futures and spot gold prices before its bearish trend resumes.
- Countertrend trends could seek bullish setups if momentum turns higher (seek a series of bullish hammers, bullish engulfing candle etc) and aim for the spot 2021 low.
- Or bears could seek evidence of a swing high below the 2021 lows, with the aim to rejoin the bearish trend at higher prices.
- But if futures and spot move lower, bears clearly have the upper hand and the trend is assumes to have resumed.
But whatever you decide to do, I suggest watching spot and futures markets in tandem to make a more informed decision. Good luck!
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