- Gold initially pulled back just a bit during the trading session here on Monday, only to turn around and show signs of life.
- The market is now breaking above the crucial 50-day EMA, and I think you need to pay attention to that.
- But I also would point out that it is a market that’s been bullish for what seems like a lifetime anyways.
Yes, recently we have seen a little bit of sideways action, given enough time, do think that we need to make a bigger decision in general. This market is probably going to continue to be one that consolidates in the short term only to maybe continue the overall massive uptrend.
Working Off Some Froth
We are working off some of this froth here, and that makes a certain amount of sense because you can’t go in one direction forever. The $3,200 level is an area that I think a lot of people will pay close attention to as it is a large, round, psychologically significant figure, and it’s an area that has shown itself to be both resistance and support going forward.
Ultimately, this is a market that I think opens up opportunities on dips. And I think a lot of people are going to continue to do exactly that. This pullback offers value that traders are willing to jump in and take part in this trade going forward.
If we can break above the $3,500 level, then it’s likely that the gold market will really start to rally, perhaps breaking out to $3,800 based on the measured move of $300 in this consolidation. It’s going to be noisy. It’s going to be a lot of difficulties from time to time, but I do think ultimately the path of least resistance is higher.
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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.