Gold markets rallied a bit during the week, showing signs of strength, as we continue to see central banks around the world cut interest rates and do some type of quantitative easing.
Gold markets have rallied a bit during the week, showing signs of strength again when you look at the candlestick. We are forming a bullish flag and that of course is a very strong sign. At this point, if we were to break above the highs of the week it’s very likely the gold will continue to go higher, perhaps reaching towards the $1550 level. With that in mind it’s likely that we will eventually see buyers jump into this market, but we need to see a breakout in order to start putting money to work. If and when that happens, the measurement for the flag could be rather huge.
This could be a $250 move, reaching towards the $1750 level. At this point, it would take quite a while to get there but overall it could lead to a position where people start buying and then adding on short-term pullbacks. At this point, it’s likely that the market participants will continue to look at gold favorably, and then build a large core position. If we were to break down though, clearing the $1450 level, the market is likely to go down to the $1400 level which is where the 50-week EMA is going to coincide. At this point, all things look bullish, but you need confirmation. Again, break above the candlestick from this past week could be reason enough to go long and start adding aggressively to a position. If the Federal Reserve looks to be extraordinarily dovish on Wednesday with the statement is very likely that we will continue to go much higher.
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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.