Gold markets were extraordinarily volatile in a session that featured a lot of fear. At this point in time, one has to wonder when this will end, because the volatility is starting to get out of hand. There are a lot of concerns when it comes to the Federal Reserve and what they are doing, but at the end of the day it seems more likely than not that the buyers are trying to defend the $1800 level. We have seen wicked moves on short-term charts during the session that the daily chart gives no justice to.
At this point, gold is almost impossible to trade unless you are on the five-minute chart, but when you zoom out you can see that there is some clarity out there, it is just that it is going to take some type of bigger move in order to finally break out of the consolidation range that we have been in. The $1830 level continues to be a major barrier to the upside, and if we do get above there, it is very likely that this market will break apart and go looking towards the $1875 level above, which is a region that has seen a lot of consolidation as of late. With that being the case, it is worth noting that area as a potential target and/or resistance barrier.
To the downside, the $1800 level is probably the most obvious area of support, not only because of the large round number sitting there, but the fact that the 200 day EMA is sitting there as well. If we were to break down below there, then it is very possible we could go looking towards the $1785 level underneath as support and breaking that would be even more negative. At that point, I would anticipate that the market would go screaming lower, perhaps reaching towards the $1750 level before you know it. The market of course has been extraordinarily choppy and difficult as of late, so the most important thing you can do at this point is keep your position size reasonable, as the markets will continue to be difficult to say the least. With this being the case, I think we will continue to bang around in the same box that I have drawn on the chart.
