Signal:
- If the market can close above the $3200 level on an hourly candlestick, I am a buyer with a stop loss at $3180, and a target of $3300.
The gold market fell rather significantly during the session on Wednesday, as we broke below the $3200 level, an area that is a large, round, psychologically significant figure, and an area that has cause quite a bit of resistance previously.
In other words, we should have a certain amount of “market memory” in this overall region.
Furthermore, the 50 Day EMA sitting just below the $3200 level also offers a certain amount of support that people will go looking for, and I believe at this point in time we will continue to see a lot of interest in this area, and if we can break back above there, I think that would be a very bullish sign gold overall.
After all, the gold market has been bullish for a long time, and now that we are sitting on top of the moving average, a move to the upside and above the crucial $3200 level would suggest that the buyers have returned and are pressing their advantage.
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The market has been very bullish for some time, so I do think at this juncture, it makes quite a bit of sense that you would be looking for buying opportunities and thinking of a pullback as a potential value. This doesn’t necessarily mean that you jump in right away, but again, the $3200 level was something important that a lot of people paid close attention to, and therefore I think you have to understand that if we were to recapture that area, a lot of people would be paying close attention. This could be what is known as a “liquidity sweep” by some technical traders.
On the other hand, if we break down below the 50 Day EMA, it’s very possible that we could see the market drop down to the $3100 level, and then down to the $3000 level, which of course is a very big psychologically important figure that a lot of people would be paying attention to.
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