JP Morgan says close all longs in gold
Posted: 05/15/2002 09:00:00 AM | © Miningweb 1997-2001
NEW YORK - J.P. Morgan Chase is recommending that some of its customers "close all longs in gold," in a technical strategist research note.
OsterDowJones reports 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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