- The gold market has been somewhat negative on Tuesday, as traders continue to see a lot of noise overall.
- This is a market that has been very bullish for some time, and the idea of fading this market isn’t something I want to do.
- With that being said, I would anticipate a lot of noisy behavior, and you have to keep in mind that the FOMC Statement comes out on Wednesday, which obviously will have a major influence on not only gold, but the US dollar, making it an extraordinarily volatile time for this market.
Technical Analysis
The technical analysis for this pair is obviously very bullish, despite the fact that the day on Tuesday was a little bit lackluster. Given enough time, I think we will try to break above the $3500 level again, given the fact that each pullback seems to be less and less impressive. If and when we can break above that $3500 level, the market is ready to rip toward the $3800 level, based on the “measured move” of the consolidation that we have been stuck in for a while.
It’s also worth noting that the 50 Day EMA is near the $3275 level and rising, so this of course is something that comes into the picture as potential support as well. We also have the $3200 level, which is the bottom of said range. I don’t think we break down below there, but if we do then I would have to rethink my strategy for dealing with gold at this point. I would anticipate the $3000 probably defines the entire trend, mainly due to the fact that it is a large, round, psychologically significant figure, and of course we have the 200 Day EMA right around that neighborhood as well. Because of this, this is a market that remains a “buy on the dips”, especially as we have a lot of geopolitical strife that could have people running toward safety at any moment.
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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.