Potential signal:
- I am a buyer of gold anywhere near the $4200 level, with a stop loss at the $4325 level, and a target of $4550 level.
- Gold continues to see a lot of upward momentum, as we are obviously not done being bullish here.
- The gold market initially rallied during the trading session on Tuesday, but has given back quite a bit of the gains by the time New York gets involved, and ultimately, I think you have a situation where traders are looking at this as a market that they will be perhaps trying to collect some of their profit in.
As we start to head into the holiday stretch, the liquidity will drop, and of course, the market will be closed a couple of times. So I think a lot of traders are a little bit concerned about holding onto gold heading into that, and that is part of what we are seeing.
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That being said, I think longer-term traders are going to look at this as a potential buying opportunity. After all, gold has been on an absolute rip to the upside recently, and that does not seem to be stopping.
Strategic Price Levels
The $4,400 level for me is a significant support level as it was previous resistance, and perhaps all we are doing is pulling back to test that for support. If we get anywhere near the $4,400 level and bounce, I am more than willing to buy gold.
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I think this is a scenario where you will try to find cheap gold wherever you can because it is one of the most obvious bullish markets. If we break above the top of the candlestick and clear the $4,500 level again as we did early in the session, then we really could take off to the upside.
When you look at the ascending triangle, there is a potential move to $4,900, which, for me, means that the market probably goes past there and tries to get to $5,000. Traders like these big numbers. Ultimately, at the end of the day, there is no way I am shorting this market, at least not until we are below $3,950, which would wipe out the entirety of the triangle, something we are not doing anytime soon.
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