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Today’s Trading Edge: Gold returns to bull market territory following Brexit outcome

Posted by WorldWideMarkets . on Jun 26, 2016 8:40:44 PM


Gold prices had their largest gain since the peak of the financial crisis in 2008.  The return of bullish bets for the yellow metal stemmed from Britain’s vote outcome to leave the EU.  Another catalyst is speculation that the Federal Reserve will refrain from raising interest rates and perhaps may even considering cutting this year.    

The Commodity Futures Trading Commission report on Friday showed that money managers boosted their net-long positions to a record high of 257K contracts. 

Price action on the gold daily chart shows that the bullish rally has resumed after tentatively breaking above the $1,320 level.  Currently price is strongly above all three key (200-, 100- and 50-day) SMAs.  If bullish momentum continues, we could see price target the $1,370 level.  Longer-term upside targets include the $1,484 zone. 

If we see a return to the downside, deeper support may come from the psychological $1,300 handle, with major resting at the 50-day SMA, which currently trades around the $1,263 level. 

The trade: Buy Gold at $1,325 with a stop loss at $1,315 and a take profit at $1,355. The Risk/Reward Ratio is 1:3

Topics: gold, $GLD, Commodity Futures Trading Commission. CFTC


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