The Gold markets continue to test the neck line of the previous head and shoulders pattern, suggesting that the market still isn’t convinced of the overall negativity. That being said, there aren’t exactly signs of exploding to the upside either. I think we are essentially stuck at the moment, between that previous neck trend line and the 200 day EMA roughly. Obviously we will eventually make a move, and I think at this point what we are looking for is some type of impulsive large candle. As soon as we get that, then we can start to talk about the next possible move.
That being said, I think if we clear on a daily close above the 50 day EMA which is currently trading at $1291.30 we could see this market go to the $1300 level, and then possibly even towards the $1315 level after that. To the downside, if we break down below the $1260 level, we will probably reach towards the uptrend line underneath. That of course should offer plenty of support, but if we were to break down below there and reach below the $1250 level, it’s very likely that we go down towards the $1200 level, via the $1225 level.
Based upon the head and shoulders pattern above, if it does come to fruition it’s very likely that the $1225 level will be targeted. It is because of this that I am much more interested in selling than buying, because even if we do rally from here it’s likely that it’s going to be very sluggish as there are several other resistance levels above. Ultimately, this is a market that should continue to be noisy, but also has the ability to chop around in the short term. Ultimately, I think we are still trying to figure out where were going longer-term.