By FXEmpire.com
The gold markets tried to rally on low holiday volume this Monday, but didn’t quite have the momentum to do so. The resulting candle is a shooting star and a lower low if we break below this level. The gold markets look very weak lately, and we now see that the $1,500 level is vital for the bulls to retain. If they give way there – this market falls much farther.
The level above to watch is the $1,600 handle. This level simply must give way if the bulls are to take charge for the intermediate trend. The breaking of this level has us buying and possibly for some length of time as the next target would have to be the $1,700 level. We see a lot of resistance above though, so this would be a difficult move to make at this point.
The support for gold comes from a massive ten year bull trend, and because of this, it has been hard for us to be sellers of this market lately. Although the last couple of months have been hard on the yellow metal, the truth is that we are a long way from where we were in this market just a couple of years ago. This run has been quite remarkable, and this is always going to make us prefer a nice signal to buy. However, the world economy has a lot of people fearing any kind of risk trade, and many funds will have been forced to liquidate their leveraged positions – always a recipe for lower gold prices.
The recent action looks choppy at best, and this is why we are keeping such wide levels to trade off of at the moment. The fact is that anyone trading the short time frames is having a difficult go of it at the moment. The range is just far too ugly for us at the moment. Because of this, we buy above $1,700 and sell aggressively under $1,500 – and wait until one of these conditions are met in the meantime as the headlines will continue to push this pair around.
Click here a current Gold Chart.
Originally posted here
