Moderate Selling Pressure Moves Gold Prices Lower

Gold is currently trading under moderate pressure today, as market participants seek to pull short-term profits. Gold has been in a defined rally mode, which began around July 9^th. From the first week of June to the first week of July, gold prices lost roughly $100 in value before finding support at $1203 per ounce.

Gold prices found significant support at $1200, and the rally that followed has taken gold prices as high as $1259 per ounce. That intraday high was achieved in trading yesterday and since that point has been trading under pressure, moving to lower pricing. As of 4 PM EDT, gold futures are trading at $1249.60, a loss of $4.70 on the day. This is the first occurrence since the beginning of this current rally in which gold has lost value for two consecutive days.

Traders are possibly squaring positions as they await the conclusion of this month’s FOMC meeting, which will include a written statement tomorrow. Although it is highly expected that the Fed will stay the course, market participants are looking for any information detailing the timeline and method of the Fed’s desire to begin to liquidate its $4.5 trillion portfolio.

Three River Evening Star Formation Identified

Based on our current technical studies we have identified a Japanese candlestick pattern called a “Three River Evening Star.” Japanese folklore says that there were three rice farmers separated by a river which joined between their lands. One day the farmers began fighting for control of each other’s land. The battle continued for many days until one farmer managed to take over one of the other farmer’s rice fields. The farmer who gained control of two rice farms had a distinct advantage and was able to take over the last rice farm.

According to Investopedia, a Three River Evening Star is a bearish candlestick pattern consisting of three candles that have demonstrated the following characteristics: The first candle is a large green candle (this occurs when the market closes above the open) located within an uptrend. The middle candle is a small bodied candle that can be either green or red that closes above the first green candle. The last candle is a large red candle (this occurs when the market closes below the open) that opens below the star and closes near the center or below the first green candle.

The Three River Star pattern (morning and evening) can reveal key reversal pivot points after defined rallies occur. However, a confirming candle is critical in determining the completion of this pattern. In the case of an evening star, the confirming candle would be a strong price decline immediately following the three-candle pattern.

Wishing you as always, good trading,