Gold markets have fallen initially during the trading session on Thursday but found buyers underneath that turned around and showed a positive candlestick. This is exactly what the market needed to see in order to suggest that perhaps there is another attempt coming to break above the downtrend line that has been so influential. Furthermore, the market also has to pay attention to the $1850 level, as it is an area where we have seen a lot of resistance previously, so if we can break above there then it is likely that we will continue the move higher.
All that being said, there are a lot of things working against gold in the short term, most obviously the yield situation as they look like they are going to start rising again, and if that rate of change gets to be a bit too much, it is likely that gold would suffer as a result. If that happens, I think initially we will go looking towards the 200 day EMA which is just below the $1800 level. Breaking below there then has the market taken on the 50 day EMA. After that, then you have the potential for a serious break down to go down towards the double bottom underneath. That of course is an area where you would expect to see a lot of support, but I have a hard time believing that we are going to hold onto it. If we get down towards that area is quite possible that we will have a significant break down.
All things been equal, I think this is a market that will continue to be noisy more than anything else, but quite frankly I do think that we are going to have a major decision made rather soon. What I will be looking for is a large candlestick that closes at the top or bottom of the range, as it would show impulsivity that this market so desperately needs. Pay attention to the US dollar, because we can also glean a bit of information from it as well, as a falling US dollar typically helps gold and vice versa. That does not always have to be the case, but it is yet another factor we can use in our analysis.
