Gold futures broke below a four-hour rising channel on September 28, dropping roughly 1.65% in a single bar, then failed to hold above the $4,200 level after a brief rally. Analyst Itai Levitan of investingLive.com cut the size of a long position on the rejection and is now watching $4,118, $4,090 and $4,079 as the next levels to test on the downside.
Gold futures broke below the four-hour rising channel analyst Itai Levitan had been tracking, turning his near-term view bearish after a decline of roughly 1.65% in one four-hour bar. He still considered a bounce from 4,183-4,193 possible, with the July 30 high near 4,180.2 adding context just below that zone.
A failed push above $4,200
Gold rallied to 4,203.80 before the US equity market opened, encouraging for the long entry Levitan had taken near the bounce zone. But price failed to hold above the $4,200 round number, then declined through five consecutive shorter-term bars with little recovery.
By the time price returned near the entry area, the position could still be open and its original stop could still be intact. However, the evidence supporting the long was no longer as strong, and Levitan reduced the position's size rather than waiting for the stop to be hit. Cutting exposure before a stop triggers can feel premature, he noted, but it limits the damage if a warning sign turns into a larger decline.
Contract size shapes the risk
A standard Gold futures contract represents 100 troy ounces, while Micro Gold represents 10 troy ounces. A 25-point move against one standard contract runs to roughly $2,500, versus $250 per micro contract, before fees and slippage. Three micros carry about $750 of exposure to the same move, letting a trader manage three separate units instead of one. The right size depends on a trader's own risk management limit, not on a wish for multiple profit targets.
Levels still in view below
With the channel broken and the recovery rejected, Levitan's near-term assessment stays bearish. He is watching 4,118 next, followed by 4,090 and 4,079 further down. 4,022 and 3,950 sit further out and only become relevant if gold extends substantially lower. A renewed move back above $4,200 would need to hold, rather than merely touch the level again, for the weakness to be reconsidered.
Source: investingLive.com
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