- The gold market initially did start falling during the early part of the trading session, reaching the crucial 50 Day EMA.
- This is an indicator that a lot of people will be paying close attention to, and you should think of it as a potential trend line.
- After all, when you look back at the totality of several months, you can see that the 50 Day EMA has in fact been very important.
- Any move below that is something worth paying attention to, but I do see several support levels underneath there that could come into the picture as well.
External Noise
Keep in mind that there is a lot of external noise at the moment, and therefore it makes a certain amount of sense that gold remains noisy. Remember, gold is a safety asset, and the fact that we had an announcement from the White House during the trading session than Japan and South Korea are both going to face a 25% tariff on August 1 due to a lack of movement in negotiations has people throwing money around the market in random moves.
Gold of course offers a little bit of safety, and that makes a certain amount of sense that people would’ve look to it for some type of portfolio protection. Regardless, this is a market that has been in an uptrend for some time, and one would have to assume that there is still a little bit of a “bid in the market” as we go farther in time.
If we do break down below the 50 Day EMA, then I’m looking at the $3200 level as a support level, and an area that I would be very interested in buying on a potential bounce. If we break down below there, then I start looking at the $3000 level, which is a large, round, psychologically significant figure, and an area where we have seen action in the past suggesting that there are people willing to get involved. I’m looking for a pullback and a bounce to take advantage of, which we may have just seen on Monday. The $3500 level continues to be the longer-term target.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.