Gold Hanging onto Major Trend Line
- Major trend line holding market up
- Longer-term uptrend in sight
- Central banks continue to ease policy
Gold markets rallied a bit during the trading session on Wednesday, and we continue to see the uptrend line hold the market higher. It looks as if the gold markets will continue the overall uptrend, but the 50-day EMA just above could come into play. If that’s going to be the case, it’s likely that the next few days will be rather crucial.
Looking at the area that the market is in right now, it features not only an uptrend line, but also a couple of hammers in this general vicinity. With that being the case, it’s likely that buyers will be somewhat aggressive. There are also plenty of things out there to throw the market around.
At this juncture, the uptrend line will be crucial to pay attention to, and as long as the market is above that line, there is the possibility of holding an upward attitude.
Regardless, with the 50-day EMA just above and the wicks at the top of the previous handful of candles, the market should find some selling pressure. Ultimately, this is a market that will be news-driven more than anything else, as gold is considered to be a “safety market”.
The market going forward
The most important thing to pay attention to here is the overall trend. One must also note that the most recent value area has been found near the $1510 level, which means there are plenty of traders interested in the market in that area, providing a bit of upward pressure as well. It should also be pointed out that there is a little bit of a “gap” in volume above, and that should allow gold to rally rather quickly.
If the market was to break down below the uptrend line, it could open up the gold market to the $1450 level. This area has seen resistance in the past and could offer support based on the mid-century mark and, of course, the fact that it should bring in “market memory”.
However, it should not be forgotten that there are central banks around the world that continue to ease monetary policy. Naturally, there is a significant amount of fear when it comes to Brexit, the US/China trade relations, tensions in Syria, and a whole host of problems that could have money looking to gold for safety.
Buying on dips should, in theory, continue to work out. This is because, although lately the market has pulled back significantly, that was probably necessary to continue the overall upward momentum in a market that has been very bullish for quite some time.