- The gold markets rallied Tuesday only to give back the gains to form a bit of a shooting star.
- The shooting star is a very negative candlestick and the fact that it has happened three days in a row suggests that there is a lot of negativity just above.
Trying to Break Above $1750
Looking at this market, it’s easy to see that the $1750 level is an area that is rather difficult to get above, and if we can break above there, then we have a path to the $1800 level. The $1800 level is previously supported and should have a significant amount of resistance in that general vicinity. The 50-day EMA sits right there as well, and it’s also worth noting that the previous trendline is in that same area as well.
Ultimately, this is a market that I think you need to pay close attention to because the US dollar has such a major influence on it, and of course, we have the Federal Reserve announcement on Wednesday that will greatly influence on what happens with the US dollar. With that being said, I think by the end of the day on Wednesday we might have a little bit more in the way of clarity when it comes to gold. That being said, I think eventually we will have some type of opportunity for a bigger move, but I am still a little bit hesitant to get involved with gold at this point, mainly due to the fact that the US dollar has been like a wrecking ball.
If we were to break down below the $1680 level, it’s likely that we could fall all the way down to the $1500 level. The $1500 level is a large, round, psychologically significant figure that I believe we will eventually see a lot of noise in that general vicinity. If we were to break down below $1500, it would be rather significant and I think we could see quite a bit of negativity at that point.
On the other hand, if we were to turn around and take on the $1800 level on a daily close, we could get a big move to the upside, perhaps opening up the possibility of a change in trend. I don’t necessarily think that happens anytime soon, so I remain negative.
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