- I’m watching gold try to hang on above $4,000, but it still looks heavy.
- Unless we can clear $4,200, I think the market has probably peaked for now.
- I’m expecting rallies to fade and watching for exhaustion to sell into.
Gold has rallied a bit during the early hours on Thursday, but it continues to struggle above the $4,000 level. With that being the case, the $4,000 level likely remains a bit of a barrier that traders just can’t seem to get above. If we rally above here, the market goes looking to the $4,150 level, and with that, I think the market has plenty of noise between here and there that could cause some headaches.
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We are sitting just above the 50-day EMA, and if we break down below the 50-day EMA at the $3,872 level, then the market drops pretty significantly down to the $3,800 level. The $3,800 level is an area that I think a lot of people had looked at as a potential target from the break of the previous ascending triangle.
All things being equal, this is a market that I think has peaked. We’ll just have to wait and see, but there are a lot of signs that we got way ahead of ourselves, and there was a bit of distribution up here near the $4,400 level.
Pullbacks Make Sense
With that being the case, I think this pullback makes sense. Now the question is, can the market come back and help itself out? It’s really not until we break above $4,200 that I’m convinced we have a real shot at going higher, and although I do think a short-term bounce is probably somewhat inevitable, I’ll be watching for signs of exhaustion to start selling. Again, though, a daily close above that $4,200 level does in fact, open up the possibility of an extension of this run, and as a result, you have to be somewhat cautious with your position sizing. But gold got way too far ahead of itself, and a lot of times, that’s how trends end. We’ll just have to wait and see. We need to go all the way back up to $4,400 and break above there to make a fresh new high. We have made a new swing low, so that’s worth watching as well.
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