If the Gold market will top out, it would be extraordinarily bullish.
Gold markets have rallied significantly during the trading session on Tuesday to show signs of strength again, in what could be looked at as a potential consolidation area from a larger standpoint. What I mean by that is that we have bounced from significant lows near the $1770 level, and of course we have seen a significant amount of resistance near the $1830 level. As I look at the chart, it does suggest that perhaps we have a bit of a range going on that we will probably hang onto, which of course is worth keeping in the back of your mind.
Looking at the moving averages, you can see that both the 50 day and the 200 day EMA indicators are sitting at the $1800 level, an area that has quite a bit of psychology tied to it. The fact that they are both flat tells me that the market is not ready to go for a bigger move, as is typically means that we will just chop back and forth. That being said, we have a couple of obvious levels to pay attention to in order to place trades. With this being the case, I think that what we have is a situation that a lot of traders will be looking back and forth in this market, and therefore if you are cautious enough, then it is likely that we will continue to see a scenario where a lot of range bound traders will probably be attracted to this market. All things being equal, this is a market that I think continues to see a lot of chop, so really at this point in time it is likely that we will continue to see a lot of back and forth but ultimately this is a market that you need to be somewhat cautious with because once we finally do get a breakout, it is going to be rather large.
It is worth noting that the candlestick was very strong for the session, suggesting that perhaps we are looking at a scenario where the buyers are starting to step in and get aggressive. For what it is worth, we have also seen the 10 year yield dropped just a bit during the trading session as well, as it looks like it is trying to top out. If it actually does that, it would be extraordinarily bullish for gold.