Weekend Review

Friday's early test and reject of the prior low set the morning up for a rally which ran out of steam just below the prior day breakdown and high volume area. Once support eventually broke there was a strong liquidation move retesting the low of the day. The failure of buyers to step into support left a weak close at 2080.00, one tick above the prior day low.

The selling of the past week or so has not been showing too many panic liquidation signs, but has waited for rallies to sell into. This leaves a potential cascade of stops above those distribution zones on a bounce. 

Above current levels there is a major composite low volume area, highlighted below. This is likely to be strong resistance on a rally, though if broken on heavy volume I'm expecting continuation of the uptrend and that area to become potential support.

Below is an RTH chart of the late June sell-off and rally after the Brexit vote. The next major swing low to test is at 2059.25 from July 6th. This is hugely important area of support in my view, and If broken on strong volume the expectancy would be to try and fill the gaps below.

This area below is also where volume has been heavy previously over the past 5 years. Failure at the bottom of that CHVA could lead to a challenge of the post Brexit low at 1975.00, also around the 50% retracement of the year low to all time high at 1981.50 (38.2% at 2029.50).

If we get a Trump victory, we're in for a global sell-off in risk assets and surge in bullion prices, I would expect. A Clinton victory could see a big unwinding of protective hedging and short covering rally back into the upper distribution recently broken down from.

Either outcome, it's going to be a volatile, wide ranging week