Gold Markets Weekly Technical Analysis
The gold weekly chart certainly looks as if we are trying to rally a bit and then give back about half those gains. All things being equal, the $4,200 level is an area that I think will continue to be a massive ceiling. With that, I think you have a situation, and it definitely shows on the daily chart, that volume is starting to run out, and we may have topped. If that ends up being the case, I think we have a pretty significant drop just waiting to happen.
The $4,000 level is an area that could be support, but if we were to break down below there, that opens up quite a bit of downward pressure in my estimation. We will just have to wait and see. But if we turn around and take out the top of the candlestick, then we will almost certainly challenge $4,400 again, which is an area that has been pretty significant. I think, given enough time, we could see this market try to reassert the uptrend, but with the way the volume is dropping, I am not overly impressed. And I do think you have a scenario where traders will look at this as a potential area of reflection.
Best-case scenario, we might go sideways. But that being the case, I think you also have to question whether the overdone scenario that we find ourselves in just needs to correct itself. Gold has been, for the most part, the last year and a half somewhat parabolic. Sooner or later, the party has to end, and we might be in the middle of seeing gravity come back into play.
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