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It’s true that the Friday session had a very negative candlestick, but just one candlestick does not suggest that the trend is over.
- The gold market is facing some major turbulence as it has been experiencing a downward trend during the trading session on Friday.
- The prices have reached down towards the bottom of a rising wedge, just above the psychologically important $2000 level.
- However, investors and traders must keep in mind that this $2000 level will attract a lot of attention and therefore, it may hold as a support level.
In the case that the market breaks below the bottom of the rising wedge, the measured move would lead down to the 50-Day EMA, which currently sits at the $1950 level and is rising. This makes sense as the market has experienced explosive growth, and typically when you see a big candlestick like this, there is a bit of follow-through, which means it’s only a matter of time before people get attracted to the market again. However, it’s also important to recognize that the market has gone too far too quickly, and therefore, this correction is necessary.
On the upside, the $2050 level is currently an area of interest as it has previously offered resistance. Therefore, it looks like we are ready to continue to look at that through the prism of potential breakouts. If the market breaks above this level, then it will probably head toward the $2100 level, which is a large, round, psychologically significant figure that has been tested multiple times. If it gets broken above, then we start to reach all-time highs, and therefore gold could really take off at that point.
It’s true that the Friday session had a very negative candlestick, but just one candlestick does not suggest that the trend is over. Gold has been a crucial part of the trade this year for wealth preservation, and it’s hard to imagine a scenario where gold suddenly becomes something that people don’t want to own. Although the US dollar strengthening doesn’t necessarily help, there are times when both gold and the dollar can go off at the same time, just as we had seen during most of the 1980s.
At the end of the day, the gold market is currently experiencing a downturn, but it’s not the end of the world. There is still potential for the market to rise if it breaks above the $2050 level, and if it breaks the psychologically significant $2100 level, then the all-time highs could be within reach.
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