ODJ J.P. Morgan Technical Analyst Tells Customers To Sell Gold
New York, May 14 (OsterDowJones) - J.P. Morgan Chase is recommending that
some of its customers "close all longs in gold," in a technical strategist
research note.
The note argued that following gold's recent bout of strength, from a
technical standpoint the metal appears overcooked and in need of a corrective
retracement.
"Weekly and monthly momentum indicators (are) overbought, (which) make the
risk reward of holding longs increasingly unattractive, even given a still
possible new high," it argued.
"We continue to think that as long as $305.50 holds, (the $314-317 area)
could be seen. However the lack of upwards momentum in recent days is a
worry," it cautioned.
"A break of trendline support at $309 would trigger a large head-and-
shoulders pattern targeting $300," it said.
"Daily momentum is mid-range still, giving room to the topside, however
weekly momentum is now at levels that have seen $20-25 reversals on three
occasions since last year's April $254.50 low."
"In addition, monthly momentum is more overbought than both the October
1999 $341 high, and the Feb 1996 $418 high," it noted.
"Given this momentum backdrop, we think it is time that more medium-term
position takers start scaling out of longs, simply due to the fact that risks
to longs are rising," it argued.
"We may have that one last new high. However, our bias would be to sell
such strength, or a break of support below $305.50 if we do not see the
upmove," it added.
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