The gold trade has been very good to a lot of traders around the world. It is because of this that it is suffering lately. The gains that traders are seeing lately are often the first ones to be sold off to recover losses from other markets, and the gold market is often one of the first markets they sell when they need to raise cash. With this in mind, it is difficult for the trader to remain bullish at times, but the last ten years have seen large gains and one should remember this when trading gold.
The recent action hasn’t been very encouraging though. The Friday session saw a bearish shooting star form at the $1,750 level and Monday saw the bottom of the range broken to the downside, signaling more selling at this point. The market will certainly have support below though, and as long as those levels are there, we aren’t interested in selling at this point.
The $1,700 level will be the first real supportive area that the market will test soon. It certainly looks very frail at this point, but only in the short-term. The entire area between $1,600 and $1,700 is one massive support level and should be a great area to buy the market going forward. The market has an extremely bullish tone to it in the long run, and we are only willing to buy overall because of this. In order for us to start selling, we would need to see a close below the $1,600 level as this would represent a massive breakdown in an otherwise massively bullish market.
The fiat currencies around the world are not loved at this point, and because of this we think the gold markets will continue to get bid in the long run. The market should find the above mentioned levels very supportive, and we want to find supportive candles in that zone in order to buy. Once this happens, we will not hesitate to buy this market. The next couple of days could still have a negative tone, so we will simply wait for our opportunity.