Gold has gone up dramatically. Adam explained a “very simple case for buying gold” in his post here. It makes perfect sense.
However, there are times when momentum fades and a corrective move occurs, or the “condition” changes and the market reverses. Technical analysis helps tell this story.
Looking at the hourly chart of gold price, there is a ceiling in place. This ceiling is located between $2526 and $2531. This is a risk level and is known as we all can see. If we break it, I expect more bullish momentum.
The price has been declining over the past 24 hours (away from the moving average) and as such, the price has moved below the 100 and 200 hourly moving averages. These levels are located between $2507 and $2509. The price is currently below these levels.
The problem is that sellers were unable to sustain the momentum for long. When there is a low start, there is a bounce back up towards the moving averages.
Sellers are trying. The ceiling is at its highest levels. The question is can gold now stay below the 100/200 hourly moving averages? Or not? It’s a trade.
If the price starts moving more strongly above the 100/200 hourly moving average, exit. If the price can break below the recent lows and move away from the moving averages, there is a possibility to see a move towards the $2470 to $2462 area and then see if the momentum can continue.
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