Gold Forecast: Continues Killing Time - 22 January 2020

Gold markets have gone back and forth during the trading session on Tuesday as traders have come back to work. That being said, we have seen a lot of volatility on Thursday as traders started to put positions on after the Martin Luther King Jr. holiday. Now that we have seen a full day of volume in the market, it suggests that we are going to continue to trade in a range bound pattern, with the $1550 being roughly the magnet for price.

It doesn’t take too much in the way of artistic license to suggest there is a bullish flag on this chart. That bullish flag suggests that we are going to go towards the $1650 level, possibly even the $1700 level. Looking at this chart, I also recognize that the hammer from last week suggests quite a bit of support, and at this point it’s likely that it will continue to hold the market afloat. Underneath there, the $1525 level is supportive, just as the large, round, psychologically significant figure of $1500 of course should come into play as well.

To the upside, the market will more than likely struggle with the $1600 level, but we have already pierced that level so it would not be a huge surprise to see this market break above there rather rapidly in some type of anti-US dollar move, or perhaps some type of geopolitical shock. Central banks around the world continue to loosen monetary policy anyway, so it does make quite a bit of sense that we would see the market find a reason sooner rather than later to go higher. Nonetheless, this is a market that is in an uptrend so therefore we can’t fight that uptrend. It’s not until we close below $1500 on a weekly chart that I would be willing to short this market, because that would be a change in the overall attitude of the market. Between now and then, this is a market that you need to look it dips as a potential buying opportunity. This doesn’t mean that we take off to the upside right away, but you can approach at this in one of two ways: you can either build up a larger core position in the form of little bits and pieces on dips, or perhaps short-term trading positions, buying on the dips and taking profits after a few dollars.

Gold

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.