- During my daily analysis of the gold market, the first thing that has caught my attention is that despite the fact that the gold market plunged overnight, there is most certainly quite a bit of support just below as we have seen over the last 2 weeks.
- In fact, one is interesting to me is that we sold off so drastically about 2 weeks ago and have since sat still.
- This is actually a very bullish sign, because it tells is one important thing: “Gold simply doesn’t want to fall.”
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Technical Analysis
The technical analysis for this market in the very short term is very neutral. However, when you look at the longer-term chart it’s obvious that the gold market has been bullish for some time, and therefore I think you’ve got a situation where every time we pull back, there will probably be buyers willing to get involved. We are hanging around the 50 Day EMA, which is sideways at the moment, but it is also something that a lot of people will be paying attention to. Volume has been drifting a little bit lower over the last couple of weeks, but that makes sense if we are just simply consolidating.
If we were to break down below the lows of the session on Friday, then it opens up the possibility of an attempt to drop down toward the $2600 level, and of course a major trend line that sits just below there. This is a market that if we do drop down to that level and bounce, I suspect that a lot of longer-term traders will be paying close attention to this move. Even if we broke down below the uptrend line, you can make a strong argument that the $2500 level will end up being important as well.
To the upside, if we were to break above the $2725 level, then it opens up a move back to the swing high at the $2800 level. I suspect this is a market that is going to try to get there sooner or later, but in the short term, we probably have a lot of noise to chew through.
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