The gold market experienced a bit of a rally during Thursday's trading session as it found support at the 200-Day EMA.
- The gold market experienced a bit of a rally during Thursday's trading session as it found support at the 200-Day EMA.
- However, there is concern that this support may not hold, given the presence of a major selloff candlestick indicating potential trouble on the horizon.
- If the market were to break below the 200-Day EMA, it could go down to the $1800 level, which is also the 50% Fibonacci level.
A breakdown below the 50% Fibonacci level would be a negative sign and could lead to a drop to the $1755 level, where the 61.8% Fibonacci level sits and may offer potential support. However, if the market were to drop below this level, it could send the market even lower, potentially returning to the lows that were reached before the rally began.
It's important to note that the US dollar has a negative correlation to gold, and rising interest rates also pose a concern for the market. There have already been three major selloff candlesticks since the market reached its high price. This volatility is reflected in the market's position between the 200-Day EMA and the 50-Day EMA indicators.
Gold Will Continue to Get Pushed Around
Given the likelihood of continued volatility, traders should approach the market with caution and focus on shorter time frames. Position size should be kept reasonable, as the only thing traders can control is their own position. It is unlikely that traders will want to go "all in" until the market breaks out of these moving averages.
Overall, while the gold market has found some support at the 200-Day EMA, there is a risk that it may break down below this level, potentially leading to further declines. The market is also facing headwinds from the US dollar and the prospect of rising interest rates. Traders should exercise caution and focus on shorter time frames while keeping position size reasonable. It may be wise to avoid large trades until the market shows signs of breaking out of its current range. Once it does, then we should have a bit of confidence build up, and a bit of “FOMO” back into the market. With all the noise coming out of the bond market and of course the US dollar, gold will continue to get pushed around on a daily basis, so you should look at this as a very choppy and short-term range-bound market for the time being.
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