Gold markets rallied again during the trading session on Friday, breaking above the 50 day EMA. Ultimately, I think that the market probably goes looking towards the $1250 level. At this point, it’s likely that we are paying attention to the uptrend line.
Gold markets bounced off a major trendline earlier in the week at the $1200 level. Because of this, I think the market is trying to recover a bit of bullish pressure, and the 50 day EMA has been broken to the upside. That’s a good sign, but the $1250 level of course offers resistance. I think at this point it’s likely that the market will continue to try to go higher, and perhaps even stay within the overall consolidation area.
The $1200 level underneath is the beginning of support, with the $1400 level above being massive resistance. Overall, it looks as if we are trying to stay within the consolidation, so that of course is a good sign, and a tradable idea. However, if we break through the $1200 level, I think that we continue to go much lower, perhaps reaching towards the $1100 level, and then the $1000 level. That would coincide with a lot of US dollar strength, which I think is possible at any moment.
I do believe in owning some gold to begin with, so I like the idea of buying it. I do so in its physical form, but leveraged trading is a completely different scenario. If you are going to try to buy this market, I would do so on a short-term pullback. That way you can get a bit of a value when it comes to an opportunity to go forward. However, if we break down below that uptrend line, I would be aggressively short.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.