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Monday, 29 February 2016 12:17

GolDown? | Possible bearish set up on Gold Futures

Considering that equities in this period are very shaky, Gold, which is a safe-haven asset, should be favored.
Despite this, we note that, at the end of a parabolic rally, it shows some signs of fatigue.
Therefore we believe that there is some possibility that april 2016 Gold Futures can reverse and begin a retracement towards lower levels.

Commitment of Traders

If we look at the COT Index, the commercials bearish stance could confirm our guess.

gold cot commitment of traders bearish march 2016 trading for purpose

Patterns and Volume Spread Analysis

Looking at the daily chart, we can see that the price is testing the latest top, facing a resistance level.
In recent days we see a shooting star (which can be defined as a pseudo upthrust, according to the Volume Spread Analysis), followed by two spinning tops (or something similar). These are signs of a possible reversal.

gold chart shooting star spinning top bearish trading for purpose

We cannot say with absolute certainty that gold is reversing, but surely it is testing a rejection level and it shows bearish setups.
Remember: this is not a trade solicitation and, if you decide to trade, you do it at your own responsibility.

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