By FXEmpire.com
The gold markets continue to sit in a fairly tight range as the Tuesday session decided very little. The move on last Friday saw the bulls come out in full force, and as a result it looks as if the market is gearing up for a large move higher. However, it must be said that the market stalled at the first major resistance point, and this is a cause for concern as well.
The weak jobs report out of America had many traders openly suggesting that the Federal Reserve was about to embark on quantitative easing again, and this will move the value of gold higher if true. As the Dollar depreciates, it takes more of them to buy various items, and gold is one of the most obvious as it is often thought of as an alternative currency.
The market may be jumping the gun here though, and it is because of this that we want to see a few possible things in order to get involved in this market. The gold market isn’t a sell to us until we close below the $1,500 at all, so selling isn’t a thought at this point. However, there is a need to see a move above the resistance area at $1,640. A daily close above that mark would do, and it would also show that the bullish momentum is picking up again.
The alternate buy signal is to buy on pullbacks. The market could very well pullback at this point, and any supportive daily candles above the $1,500 are signals to buy in our eyes. The level is a major one in our eyes, and this makes us believe that any action below it would mark a major shift in momentum and market attitude. The breakdown would more than likely signal another big leg down in our eyes.
The level above current price is significant as well, and could be a bit of a struggle to get through. In fact, we are counting on that pullback as more likely than a quick breakout. The pullback allows us to buy at a better price – something you should always be thinking about.
Click here to read Gold Technical Analysis.
Originally posted here
