By FXEmpire.com
The gold markets fell most of the session on Monday, only to bounce and form a nice looking hammer just below the often visited $1,640 level. The hammer forming suggests that perhaps there are buyers starting to step back into the market, and this makes sense as the longer-term trend is up.
The market looks as if the $1,700 level will be the biggest barrier in the immediate future if it can break higher from this point. The biggest issues facing gold at the moment seem to have little to do with gold itself, but rather to do with the European Union and its problems. The financial crisis in that area seems to be the biggest focus as to the “risk attitude” of the financial markets on the whole, and it is because of that it will continue to be a choppy trade, regardless of which direction we head next.
The top of failure to push prices lower for any substantial amount of time does suggest that perhaps there is a lot of support underlying this market, and as it has been trending higher for over ten years this shouldn’t be any kind of surprise. As for us, we still stand by the thought that gold is going continue to rise over time. The real question is what kind of trader you are, as it will determine what kind of trading strategy you will want to employ.
No matter what kind, buying is the only thing that is feasible in this market. The question is if you are trading short term or long term. For the short term traders, there looks to be a bit of consolidation between current levels and the $1,700 level. For the longer term trader, this market is a buy every time it dips, using a pyramiding approach as you add small bit to the overall position over time. For us, we choose to have a core position that we can add to when price action warrants so. We certainly aren’t ready to sell, and until we see a sub-$1,600 daily close, it isn’t even a thought.
Click here a current Gold Chart.
Originally posted here