Gold Markets Recover After Initial Plunge

We will find plenty of “buy on the dip” type opportunities over the next few weeks.

Gold markets fell hard enough in Wednesday’s trading session to show signs of negativity, but we turned around to show signs of life. In fact, we are trying to form a bit of a hammer on the daily chart, which usually means good things. The market has recently fallen over the past two sessions, but I think part of that would have just been the fact that gold could have been overbought in the short term.

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The $1970 level above was the previous resistance, so it will be interesting to see if it offers resistance again. If we can break above this level, then the market should turn towards the $2000 level. The $2000 level price action has some psychological importance attached to it, so we might have a bit of a backseat as we saw last time we got there. If we can break above the $2000 level, it is not only a psychological victory due to the large, round and psychologically significant number, but also because we had formed a shooting star there.

Alternatively, if we break below Wednesday’s trading session lows, it is likely that we could move to the 50-day EMA below. It is currently breaking from the $1925 level and should provide some momentum support. The market has support up to the $1900 level, so as long as we can stay above that level, you can always argue that we are still bullish. Breaking below the $1900 level would then open up the possibility of a move to the 200-day EMA and then possibly the $1800 level. I don’t think that’s happening though, because there are so many issues with inflation and fear that gold continues to get a lot of attention.

I believe that given enough time, gold markets will continue to find plenty of buyers, so I think this is a situation where you will find plenty of “buy on the downside” type opportunities over the next few weeks. . At this point, it’s been a nice pullback, but it’s basically a 50% Fibonacci retracement from the last impulse higher.