SPECIAL DIRECTIONAL TRADE REPORT 22nd

July, 11

1

MCX GOLD– Aug Contrac t (CMP `22890 )

Technical Outlook & Trading Strategy:-

The prices of Gold witnessed a strong rally from the lows of  `  21614 levels as on 01st 

July, 2011 to

register a high of `  23320 levels as on 19th

July, 2011. Since then the price of Gold has been consolidating

within broad ranges of `  23275 to `  22930 levels. But, as outlined in the chart above the price pattern of 

Gold within this consolidation range has formed a bearish head and shoulder pattern on the intraday

charts. The neckline support for the said pattern is placed at the `  22960 levels and the prices have now

registered a breakdown below the same on a closing basis. A head & shoulder price pattern wherein the

 prices have registered a breakdown below its neckline support is an extremely bearish technical setup

and will have a negative effect for the future price movements of an index/stock or a commodity. The

measuring implication of the pattern suggests that the price can decline to levels of  `  22600 levels. The

sell off witnessed during the previous session was also on the back of strong surge in volumes which is a

clear indication that the prices were under supply pressure. Some of the other technical factors that 

support the bearish argument are the sell signal given by the MACD indicator and the price sustaining

below all of its key moving averages.

We recommend traders to sell 50% between `  22860—`  22890 levels and again on rallies to `  22940—

`  22970 levels with a stop loss placed above `  23056 levels for initial downside target of `  22700 levels

 followed by the implied target of `  22600 levels. 

 

MCX  GOLD

AUG CONTRACT 

OPEN ` 22926

HIGH ` 22930

LOW ` 22877

CLOSE ` 22890

 

SPECIAL DIRECTIONAL TRADE REPORT 22nd

July, 11

2

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