This market is now threatening the $1830 level, which is an area that has been significant resistance previously. At this point, it comes down to whether or not we can continue to go higher? It certainly looks as if we are going to make an attempt at it considering that the candlestick is so long, and we are closing towards the top of it.
Break out to the upside, the market is likely to go looking towards the $1860 level. That gap being filled would of course be typical technical analysis, and therefore if we were to break above that level it is likely that we could go looking towards the $1910 level. That is an area where we have seen a significant amount of resistance in the past, so if we can break above there then it is likely that the market could go looking towards the all-time high.
On the other hand, if we were to break down below the candlestick from the Wednesday session, then the market is likely to go looking towards the $1750 level, an area that has been significant support in the past. Furthermore, it is also a “midcentury mark” so I think a certain amount of people will be paying attention to it. If we were to go below there, then it is likely that we go looking towards the double bottom near the $1680 area. That area should hold obviously, but if it does not then gold and fall apart. All things being equal, this is a market that I think continues to see a lot of noise based upon the US dollar, but it certainly looks as if we may try to fill that gap in the short term, which does make a certain amount of sense as futures markets tend to do. The size of the candlestick certainly is impressive, so that in and of itself could be reason enough to think that the buyers are going to jump in. Ultimately, the gold market could be a very interesting place to be over the next several weeks.
