Gold markets rose again on Wednesday as the risk on trade in the metals came back into play. The $1,650 level is obvious resistance, and at this point in time it appears the market wants to try to break through. The breaking of that level would make a strong case for the bulls in this market that has been in an uptrend for over ten years, but it did stop short for the session.
The present market action has the gold markets hovering between $1,550 and $1,650, and as a result there seems to be a bit of accumulation at these levels. The recent movement has been very strong, and as a result we feel that a breakout is coming in the near term. In fact, we are a bit surprised it hasn’t happened yet.
The Europeans will almost undoubtedly have to print more Euros to get out of the mess that they have created. The printing of fiat currencies always tends to put a bid in the markets for gold, and this time shouldn’t be any different. The Federal Reserve also is going to possibly print during the year, and as a result we think that the fiat currencies overall will continue to be distrusted. In fact, we expect gold to rise for the year against most currencies out there.
The candle for the session is fairly strong, but it did close just below the important level. This has us waiting to buy this contract as we see $1,650 important mainly because of the shooting star about 2 weeks back. These candles will often show extreme resistance levels. With that in mind, we are willing to buy on a daily close above $1,650 – and are very interested in buying on dips down to the $1,550 support level. We will look to shorter time frames such as the hourly chart to buy dips, but will wait until a daily close in order to buy above the resistance area. We simply cannot make a strong argument for selling gold as the uptrend is so strong overall.
Gold Forecast January 12, 2012, Technical Analysis
Originally posted here
