Potential signal:
- I’d be a buyer of gold at $2938, with a stop loss at $2890, aiming for the $3000 level.
During the trading session on Friday, we have seen the gold market chop back and forth, just as it had on both Wednesday and Thursday. We are currently sitting just above the $2900 level, and I think this area is now starting to be a bit of a squeeze, perhaps trying to build up the necessary inertia to break out above the top of the bullish flag that we have been forming for some time.
If we were to break down below the $2900 level, I don’t necessarily think that’s a particularly bearish sign, I just think it means that the market is still trying to figure out whether or not it has enough momentum to continue going higher. The 50 Day EMA happens to be at the bottom of the bullish flag, near the $2875 level, so I think it adds yet another dimension to the idea of support for this candlestick pattern.
Many Reasons for Gold
There are many reasons for gold to be moving at the moment, not the least of which would be the concerns about tariff wars. There are also concerns about the Ukraine war, and of course the fact that the United States looks to be heading into a recession. The jobs number on Friday was a little bit weaker than anticipated, but it wasn’t as bad as it could have been. Because of this, I think that you will continue to see gold look positive over the longer term, but we may be waiting for something else to give us an explosive move to the upside. Regardless, I have no interest in shorting this market anytime soon, as it has been so bullish, and of course there are so many reasons that could make it go higher. Certainly, the “path of least resistance” is to the upside and therefore we need to look at it through that prism.
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