The gold markets fell initially during the session on Monday, but as you can see found enough support at the $1310 level in order to bounce and form a nice-looking hammer. There have been a couple of hammers in this general vicinity, so I feel that the market is in fact going to continue going higher, but at this point in time it appears that the market may have to take a few moments in order to continue to keep the momentum to the upside. The market will often have to take a breather in order to attract more buyers, which should eventually turn out to be the case.
A break above the $1335 level should send the market to the $1400 level, which was the high from the month of March. We fell from that area rather significantly, but it now appears that we have broken above significant resistance, and are now using it as support. Because of this, I am very bullish of the gold market, although I recognize that it could take a little bit of time for the move to appear.
Break out to the upside, and then a real challenge of the recent highs.
I believe that this market will in fact break out to the upside, and then challenge the recent highs that we have seen. However, I think that there is a significant amount of noise between here and the $1350 level, so even if we break above the $1335 handle, I think the market will continue gyrate and favor short-term traders until we get above the aforementioned $1350 level. Ultimately, it would make sense that the gold markets continue to go higher, as they had been significantly sold off and now that we have made the impulsive move higher, it tells me that there is in fact significant buying interest by so-called “smart money”, which often determines when “accumulation” happens in the marketplace as gold had become far too cheap, and therefore invites value investors, as they recognize a longer-term trend of gold is still higher, and has been for years.
