Gold prices in India are currently under selling pressure, with the intraday trend leaning towards a decline, according to a leading market analyst. This bearish outlook suggests a specific trading strategy for investors and traders monitoring the precious metal.
Analyst View and Market Sentiment
Jateen Trivedi, Vice President and Research Analyst for Commodity and Currency at LKP Securities, has pointed out that gold is experiencing significant selling pressure. He states that the intraday bias is downward and advises a 'sell on rise' approach. The key resistance level to watch for this strategy is near ₹1,34,000.
On the Multi Commodity Exchange (MCX), the February futures contract for gold was trading around ₹1,34,100. This level comes after the commodity failed to hold ground above recent intraday resistance points. The price movement on shorter timeframes, like the 15-minute chart, indicates that any recent recovery was merely a correction, with fresh selling emerging at higher price levels.
Technical Indicators Paint a Bearish Picture
A detailed look at the technical setup reinforces the cautious stance. The behavior of momentum indicators and open interest data suggests that any price rallies are likely to meet resistance, keeping the short-term outlook negative.
Key Technical Levels and Tools
Moving Averages: The price is trading below a cluster of short-term Exponential Moving Averages (EMAs). Specifically, the EMA 8 has been unable to cross decisively above the EMA 21, reflecting weak short-term momentum and confirming that attempts to move higher remain vulnerable around the ₹1,34,000 mark.
Bollinger Bands: Gold is trading below the mid-line of the Bollinger Bands, which signals a loss of bullish control. The upper band, situated near ₹1,34,600, continues to act as a strong supply zone. Conversely, the lower band suggests there is room for prices to extend their decline further.
Pivot Points: Based on the previous day's trading, the key resistance zone is identified between ₹1,34,000 and ₹1,34,600. Immediate support levels are placed at ₹1,33,000 and ₹1,32,500. The repeated rejection of prices near the pivot resistance strengthens the argument for the sell-on-rise strategy.
Momentum and Market Structure Analysis
RSI (Relative Strength Index): The RSI is hovering near the 45 zone, indicating weak momentum and a distinct lack of buying strength. Remaining below the neutral 50 mark, it supports the case for a continuation of the bearish trend.
MACD (Moving Average Convergence Divergence): The MACD indicator remains in negative territory. The signal line is positioned above the MACD line, and although the histogram has flattened, there is no clear bullish crossover. This configuration suggests that selling pressure is still the dominant force in the market.
Open Interest & Volume: Market data shows rising open interest alongside a muted price recovery. This combination typically points towards fresh short positions being built up, which reinforces the bearish intraday outlook.
Intraday Trading Strategy for Gold
Based on the above analysis, the following trading view is presented:
- Strategy: Sell on rise.
- Recommended Entry Level: Near ₹1,34,000.
- Stop-Loss: ₹1,35,100.
- Downside Target: ₹1,32,500.
- Bias: The outlook is bearish as long as prices stay below ₹1,34,000. Strength would only be expected upon a sustained move above ₹1,35,100.
(Disclaimer: The recommendations and views expressed by market experts are their own. They do not represent the views of The Times of India. Investors are advised to consult certified experts before making any investment decisions.)
