Gold markets plunged during the trading session on Thursday, as we have broken through a significant uptrend line. The uptrend line of course is something that I have been paying attention to for a couple of days, as the market had recently seen a lot of support in that general vicinity. By doing so, the market is likely to go looking towards the $1750 level. The $1750 level is an area that a lot of people would be paying close attention to, as it is an area where we have seen a lot of choppiness previously, so it does suggest that there is a certain amount of support there.
A bounce from here could see the market test the previous trendline, which is an area where I would look at the possibility of shorting this market at the first signs of exhaustion. After all, we are in a downtrend for a reason, and therefore I think that any bounce has to be looked at with suspicion this will be especially true on Friday, as we have the Non-Farm Payroll announcement coming out. After all, that can make the market jump as far as the US dollar is concerned, and that could send this market back and forth. If we simply break down, then it is just a continuation of the bigger move.
Pay close attention to the yields coming out of the 10 year note in America, because as it rises, it does work against the value of gold. Furthermore, we have the 50 day EMA getting ready to cross below the 200 day EMA again, forming the so-called “death cross.” The only thing that makes me a bit leery about that is the fact that it is coming from a place of both EMA indicators going flat. At this point, it is not until we break above the $1800 level or so that I would consider buying, and I would need to see the weekly candlestick close above there, not just a simple move above there. At this juncture, gold looks very likely to continue grinding lower, and I will look at any rally as an opportunity to start shorting a market that has been so mercilessly beaten up.
