Gold Forecast January 23, 2012, Technical Analysis

Gold rose during the Friday session as the $1,650 resistance level has been successfully breeched. The level was even tested during the same session as support, and has been found to be solid. The breaking above and the consequent pullback makes us believe that this market has found strong support at this point.

The breaking above that level is important as it shows a closing of the gap we had in December, which was always going to be a concern to technical traders in this market. The closing of this will signal that the bulls have ran this contract back up, and now we need to see if the strength can continue. We have maintained all along here at FXEmpire that we believe this market is still bullish, and haven’t been selling at all.

The Friday candle formed a hammer-ish shaped one, and this shows that people were joining in on the buying. The session closed at the top of the range, and this is a bullish signal in and of itself. A break higher on the charts would signal the next leg up, and this is something that we plan on joining as the run could run straight to $1,700 before finding significant resistance.

The buying of gold by central banks continues to be a supporting factor in the gold markets, and the printing of money will do nothing to stop it either as trader run from fiat currencies to buy hard assets like gold. The selling of this market is the pain trade, and as bears have found out over the last 11 years, this market can only be bought when you look at thing objectively.

We are willing to buy the breaking of the top of Friday’s range, and also on the dips. There are several support levels just below, and we think that the $1,650 and $1,600 levels are very significant now. Judging by the recent price action, it does look like the markets are primed to grind higher, and the piling in on this upward trade may just be beginning.

Gold Forecast January 23, 2012, Technical Analysis
Gold Forecast January 23, 2012, Technical Analysis

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