As per our previous recommendation dated May 15 to go Short on MCX Gold, the first target of Rs.25450 has been achieved.
Hence, in our view, profits on Short positions (as per our previous recommendation) should be booked at the current levels and fresh Short positions should be initiated on rallies. The price now faces immediate resistance near the Rs.26600 level. The general trend continues to look bearish below trendline resistance S near Rs.27200 level. As such, a test of September 2011 low near Rs.24990 level looks possible in the medium-term.
The 14-period RSI indicates weak price momentum as long as it moves within the downward-sloping trend channel (C-C1), and holds below the 50 mark.
As long as the price sustains below trendline resistance S on a weekly closing basis, selling on rallies is advisable.