Gold Forecast November 16, 2015, Technical Analysis

Gold markets went back and forth during the course of the session on Friday, testing the $1080 level. This is an area that has been rather supportive in the past, as you can see during the month of August. There was a lot of noise in that general vicinity, so that of course means that it is a decent support barrier. However, if we break down below the bottom of the hammer from the Thursday session, it is at that point in time that we feel this market can break down to the $1000 level.

Looking at this chart, we do recognize that we could rally from here, and perhaps even gain quite significantly due to the fact that this area has been so supportive in the past. Any rally at this point in time would have to be looked at with suspicion though, because the US dollar is strengthening overall. A strengthening US dollar typically means lower gold prices, although the correlation isn’t necessarily one-to-one. That being the case, it is simply thought of as a secondary indication of where the market may go. Any rally at this point in time will more than likely find plenty of resistance at the $1100 level, and then of course the $11,020 level.

A resistive candle above is a selling opportunity, and we will continue to use of those as trading opportunities. On the other hand, we could break down below the bottom of the hammer from Thursday, and at that point in time we think that the downward momentum would pick up. However, at this point in time it appears that we are a bit oversold so a bounce is almost imminent at this point. Ultimately, that is not something that we are looking to buy, just simply an opportunity to take advantage of perceived value in the US dollar. All things being equal, we do anticipate that the sellers will continue to run the gold market into the ground currently. Until the Federal Reserve has to abandon any hopes of an interest-rate hike, it’s hard to imagine the gold will take off to the upside for any significant amount of time.