- Gold markets did rally a bit to kick off the session on Monday, but it’s worth noting that we were in a somewhat thin environment as it was Martin Luther King Jr. Day in the United States, meaning that a lot of the big houses that trade the futures markets would of course been away.
- Because of this, you can only read so much into the candlestick, but it does make a certain amount of sense that we would pull back from here, as you can see that we have gone somewhat parabolic.
Ultimately, this is a situation where we have gotten overdone in the short term, but that does not necessarily mean that we are going to see a major reversal. I think at this point, most people will believe that the market should have plenty of buyers waiting underneath, and at various levels. It’s obvious as to what the trend is now, so I do think you have a situation where you have to look at this through the value of “being paid to wait.” That was something that Jesse Livermore spoke about ad nauseum in his writings, that you are better off simply waiting for opportunities to present themselves instead of trying to chase them.
Looking for Opportunities to Pick Up Cheap Gold
There will be a lot of people out there that will get bearish on the next major pullback, but at this point, it certainly looks as if the momentum is still with the buyers. I also believe at this point we will eventually see the gold markets reach the $2000 level, perhaps even higher than that. After all, a lot of people are worried about protecting their wealth, and gold is one of the first places they will go to do so. In fact, we could drop all the way down to the $1840 level, which is where the uptrend line currently resides.
The 50-Day EMA sits just below there and is rising, and of course, we recently formed the “golden cross” that a lot of longer-term traders pay attention to, when the 50-Day EMA breaks above the 200-Day EMA. That’s normally a very late signal, but it is what it is. It’s also worth noting that the 50-Day EMA is sitting at $1800 and rising as well. The shooting star for the Monday session is not something I’m overly concerned about, but I am looking for an opportunity to pick a “cheap gold.”
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