Gold Forecast: Gold Hovers Just Below Significant Resistance

The overall attitude of the market certainly looks bullish in the short term, but it is only a matter of time before the weight allows the market to turn around and fall significantly.

The gold market has rallied significantly during the trading session on Monday to reach towards the same resistance barrier that we have tested over the last couple of trading days. All things been equal, the market is likely to go looking towards the resistance area that extends all the way to the $1835 level. Any signs of exhaustion in this area will more than likely get sold into, but if we were to break above the $1835 level, then it will more than likely send this market much higher. In fact, which could have this suddenly looking like a “buy-and-hold” type of situation.

The gold market of course has major influence from the outside, especially if the 10 year note. The interest rates in the United States rising of course works against the value of gold, as it is easier to hang onto paper than it is to pay storage for a huge amount of metal. With that being the case, the market is likely going to continue to be noisy, but really at this point in time I think we are starting to get towards the upper reaches of the overall range, and therefore I would think that we would have a lot of selling. On the other hand, if we were to break above the $1835 level, then it allows this market to really build up momentum. In fact, you can make an argument for some type of mutated “W pattern” that a lot of people would be paying close attention to.

On the other hand, if we were to break down below the 50 day EMA, I think this market could go looking towards the $1725 level. Breaking down below that level then opens up a move towards the $1700 level, and then eventually the multiple lows at $1680. Any move below that level could open up a massive failure. That being said, it would take quite a bit of momentum to make that move to the downside. The overall attitude of the market certainly looks bullish in the short term, but I do think that it is only a matter of time before the weight allows the market to turn around and fall significantly. The volatility continues to be a major driver of what happens next, but clearly, we are getting to an area that shows signs of exhaustion.

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.