June gold futures on the Comex division of the New York Mercantile Exchage on Monday hit another fresh contract high. Futures prices also notched a fresh 25.5-year high, basis nearby futures. The next major upside technical objective for the gold bulls is to close prices above psychological resistance at $700.00 an ounce. Above that lies longer-term technical resistance at the September 1980 spike high of $729.00 an ounce, basis nearby futures. And above that lies the January 1980 high of $873.00 an ounce.
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The gold futures market is in a “parabolic” move as evidenced by the accelerating uptrend seen on the monthly continuation chart for nearby gold futures. Indeed, the longer-term uptrend is also very powerful. The Directional Movement Index (DMI) overlaid on the monthly gold chart shows an ADX line reading of 60.37. Any ADX line reading of 30.00 or above does suggest a strong trending move is occurring in a market.
A close in June gold futures below support at $610.50 would provide the gold market bears with some fresh near-term technical momentum. And a close below major psychological support at the $600.00 level would give the bears better downside technical momentum. It would take a close below solid near-term technical support at the $585.00 area in June gold to produce serious near-term chart damage to suggest a near-term market top might be in place.
In July silver futures, bulls are again making good progress after recent highly volatile price activity. For the bulls to gain more upside technical power, they would have to push and close prices above the contract high of $14.84 an ounce. A close above that level would open the door to a challenge of major longer-term technical resistance at the 1987 high of $14.91 an ounce. The silver bears would gain some fresh near-term technical momentum by producing a close in July futures prices below the last “reaction low” on the daily bar chart, at $11.715 an ounce. Bears would gain better downside technical momentum by producing a close in July silver below psychological support at $11.00.
By Jim Wyckoff
Please visit Jim’s site www.jimwyckoff.com