The gold market gapped a little bit higher to kick off the week, but then proceeded to drop immediately. That being said, the market continues to see a lot of noisy behavior in this general vicinity, and I think that what we are going to see is continued noise sitting just below the 200-day EMA. The 200-day EMA offers a lot of psychological and technical resistance, sitting at the $1800 level.
If we break down below the bottom of the candlestick for the session on Monday, then it opens up the possibility of a move down to the $1760 level, an area that we have bounced from a couple of times. If we break down below that level, then it is very likely we could go looking towards the $1725 level. The $1725 level is the gateway to much lower levels, as it could open up a new leg to the downside. The market is more likely than not going to go down to those levels, but at this point in time it is likely that we will see a lot of noisy behavior. What is interesting is that interest rates are dropping, and I think that people are starting to get away from the narrative of extreme inflation.
To be honest, it is not a huge surprise that gold has been falling, because quite frankly it has underperformed against multiple assets, not just Bitcoin like you typically hear. Because of this, I think what you are seeing here is just a representation of just how poor gold has been, so it is not overly surprising to see that the market cannot get above all of this noise that extends all the way to the $1820 level. The previous uptrend line, the 50-day EMA, and the 200-day EMA all cause issues, but you can see that there have been a lot of long wicks to the upside showing just how weak this market is. I believe that rallies are to be sold, at least until we can get a daily close above $1820, which is a long way from here. Ultimately, this is a market that I think has a lot to prove before you can be a buyer of it, so this should be a nice opportunity to short gold occasionally on signs of exhaustion.
