A significant pullback is expected in the gold market, but it should eventually become a great buying opportunity.
The gold market showed signs of life again after falling during Tuesday’s trading session. The $1900 level has been significantly breached, making it a short-term support level. Breaking down below this level could cause a drastic drop in the market. On the other hand, the market could go up to the $1950 level, which is in the middle of the recent selloff.
- There is a lot of selling pressure around the two massive red candlesticks on the chart.
- It’s crucial to note that the market bounced from the 200-Day EMA, which was above the 50% Fibonacci level.
- With the market showing a lack of faith in the Federal Reserve’s ability to fight inflation, gold is likely to see buying pressure.
Despite inflation numbers coming out as expected in the CPI numbers on Tuesday, there was no real help for the market. If the market breaks down below the $1900 level, it could lead to a move down to the 50-Day exponential moving average at the $1856 level, which is rising. Further down, the market may threaten the 200-Day EMA. Only if the market breaks down below the 200-Day EMA will the trend take off to the downside.
A significant pullback is expected in the gold market, but it should eventually become a great buying opportunity. Traders should keep an eye on interest rates because if they start to take off, gold could take a hit. At this point, traders should look for value that they can take advantage of with a reasonable position size.
In conclusion, the gold market has shown signs of life after falling during Tuesday’s trading session. The $1900 level has been significantly breached, and the market could move up to the $1950 level. However, if the market breaks down below the $1900 level, it could lead to a drastic drop. Traders should keep an eye on interest rates and look for value opportunities with a reasonable position size. Overall, a significant pullback is expected, but it should become a great buying opportunity in the long run. This of course, is only true if we get some type of support. That being said though, after the type of move that we have seen, it’s difficult to imagine that there will be buyers looking to take advantage of value underneath current levels of trading.
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