By FXEmpire.com
The gold markets had a fairly quiet day in on Monday in comparison to the massive rally that the market saw on Friday. The gold markets rallies hard after a poor Non-Farm Payroll number on Friday, and the possibility of another round of quantitative easing by the Fed in reaction. The hope of QE3 is probably just that at this point – hope – but the possibility is there now.
The idea of the Fed easing wasn’t one that many traders embraced just a week ago, and as a result the gold trade was pummeled as the inflation fears dissipated. The market still has a massive point of inflection at the $1,500 level, and as a result we simply won’t sell until we get below that level. The area looks to be spot where the trend could change for a significant amount of time, but the area has been so supportive over the recent period that it is going to take something rather special in order to break down. In other words, we need some kind of shock to break it down at this point. The trend has been up for eleven years, and as a result it takes a lot to turn things around.
The candle for the session looks a bit like a hammer, but it is very stubby, so only so much can be read into it. The market looks as if it tried to fall, only to fall in the end – but only ever so slightly. The action seemed a bit odd considering how brutal the rally was on Friday. Because of this, we would be leery of adding positions at the moment to the upside, and would wait until the top of the Monday session is broken to the upside. The $1,640 area should be resistive, but in the end it is only a minor area.
For those trading longer-term, this market should be a buy. However, there is going to be a lot of volatility in the meantime. We do prefer to buy on pullbacks as we get supportive action.
Click here a current Gold Chart.
Originally posted here
