Gold Forecast: Threatening Top of Larger Consolidation Area

Christopher Lewis

I do believe that the next couple of days will give us a bit of a “heads up” as to where we are going for the next week or so.

Gold markets gapped higher to kick off Wednesday, turned right back around to fill the gap, and then turned around to show signs of strength again. At the end of the day, the market is just above the $1825 level, and it looks at this point like we will probably threaten the $1830 level, an area that I think is the top of the overall consolidation area that we have been in.

Advertisement
Is now YOUR time to trade gold ?
Don't let fear prevent profits!

Trade Gold Now!

If we can break out of this area, then I anticipate that the $1875 level will be targeted, as it is an area of extreme interest and on the volume profile (not shown on the chart) It is also an area that has shown a lot of interest. This is a market that is going to be paying quite a bit of attention to multiple markets, not just gold itself. After all, you need to be cognizant of what is going on with the US dollar as there is a negative correlation, and you also have to understand what is going on with the 10-year note and rates coming out of America. Over the last couple of days, we have seen rates drop a bit, which makes gold much more attractive. Obviously, the exact opposite can happen, so keep an eye on that bond chart.

If we break down below the lows of the trading session on Wednesday, then it is likely that we could go looking towards $1800 level underneath which is where the 50 day EMA and the 200 day EMA both sit. Furthermore, it is a large, round, psychologically significant figure that a lot of people will be paying attention to, so it does make sense that it would offer support. A breakdown below that level then opens up the possibility of a move down to the $1780 level, which is possible, but we would need to see a bigger move in the greenback to make that happen. With that being said, I do believe that the next couple of days will give us a bit of a “heads up” as to where we are going for the next week or so. Keep in mind that gold is very volatile, so I would not have a huge position on at the moment, but once we break out or turn back around, you can trade with a little bit more size.

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.

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.