By FX Empire.com
Gold markets had a fairly flat week as the “risk on” and “risk off” attitude of the markets continues to get tested by various factors around the world. The Greeks continue to drag the crisis out, and the debt issues haven’t done anything to restore confidence in the markets overall. The Iranians are threatening a stop delivery to European countries in order to counteract the upcoming embargo by the EU, and the demand of markets worldwide can come into question from time to time as well.
However, the central banks around the world are also printing money, cutting rates, and introducing more and more liquidity. These are normally good signs for the gold markets, and the moves that we have seen over the last several weeks could probably be directly attributed to them. The market lacks serious trust in several fiat currencies, and of course there are even some who think the Euro will cease to exist in the future. Because of this, traders will often go into the precious metals markets for a store of value.
The recent price action over the last two weeks has been tight, but we are sitting just above the top of a recent downtrend channel, so support could come into play relatively quick. The doji for the week sets up a fairly simple trade signal as it shows the market is winding up and there could be a move coming soon.
A break of the top of the week’s candle is bullish, and we would actually use it to take notice of the top of the previous week’s candle which is our actual buy signal. Once we clear that level, this market should continue to rise over time. In order to sell this market, we would need to see a break below this past week’s candle, but it would only be a temporary trade as we still believe in the overall uptrend as there are simply too many reasons to buy gold, and sell paper fiat currencies in the markets presently.
Gold Forecast for the Week of February 13, 2012, Technical Analysis
Originally posted here
