By FXEmpire.com
The gold markets fell for part of the week over the last five sessions, but managed a bounce towards the end of the week. The market formed a hammer for the week, and we think this is a very positive sign for the market.
The $1620 to $1,640 area has been very supportive lately, and we think this pair should continue to find buyers at that level. The $1,600 level below should also be supportive, and there is a longer term trend line that the market has been following for years just below current market levels.
The gold markets have been bullish for most of the last ten years, and we think that overall this should continue. The central banks around the world continue to buy gold, and because of this we think there is going to be strong underlying demand for it going forward. The selling of gold has only brought pain to anyone who has attempted it over the last few years regardless, so we never recommend selling.
The news conference by Ben Bernanke this previous week suggested that the Federal Reserve is still willing to step in and ease monetary policy if there is some kind of trouble in the markets, and as a result the Dollar has been punished over the last couple of sessions for the week. Because of this, there should be a natural bid in the gold markets as well.
The Non-Farm Payroll numbers come out on Friday, and will more than likely continue to sway traders on whether or not quantitative easing is likely, and will certainly move this market. As long as the trend line is continuing to hold, we are only buying this market or staying flat. The fiat currencies around the world are being trusted less and less, and as such we feel that the longer term direction for gold should still be up.
As for a trade, we are ready to buy on a break of the top of the weekly candle, and aren’t selling unless we have a weekly close below this uptrend line.
Click here to read Gold Technical Analysis.
Originally posted here
