Gold markets struggle to hold onto gains

Alan Penny

30 April 2019

3 min read

Gold markets rallied quite significantly during the early part of the trading session on Tuesday but continue to struggle to hang onto gains. In fact, there was a massive selloff as soon as the futures pits opened at 8:20 AM Eastern Standard Time in New York, which was not a good look. We failed directly at the neck line of the head and shoulders that I have drawn on the chart, and that could be a bit of a leading indicator as to where we go next.

Head and shoulders

The head and shoulders pattern of course is something that should be paid attention to, as it is so predominant. The fact that we have tested the neck line of the head and shoulders pattern a couple of times and it has held each time it’s been tested is also something that is worth paying attention to. While we haven’t completely collapsed at this point, it’s obvious that the market is struggling to go higher. Sometimes, it’s not about where the market is going to go but where it won’t go.

Looking at the head and shoulders, it measures for a potential move down to the $1225 level, so it certainly worth paying attention to. Overall, the gold market does look a bit suspicious, and of course will be influenced by the usual suspects such as the greenback.

gold daily chart

Gold daily chart

Federal Reserve

There is the Federal Reserve meeting going on currently, so that of course can have an effect on what happens in Gold markets as well. Because of this, there could be a lot of volatility when it comes to the greenback and of course by extension the gold market. With that in mind keep an eye on any statements that come out of Washington DC and what happens with the USD overall. Currently, the EUR/USD pair broke above the 1.12 handle, which is a sign of weakness in the greenback, so that should have Gold markets rallying much harder than they are. That of course is something to pay attention to as well.

200 day EMA

The 200 day EMA is just below, so pay attention to the $1275 level. This is an area that should continue to be of interest, so by all means we need to pay attention to that region to see what happens when tested. If we make a fresh, new low then that’s obviously a very negative sign and then I think that the $1250 level would be the next target, followed by the previously mentioned $1225 level. Keep in mind that gold can be a bit of a safety play, so if we get some type of collapse in the stock markets that could have an effect as well but overall the 200 day EMA is probably the most important technical indicator to pay attention to right now.

The main take away

The main take away of course is that the Gold markets are struggling to go higher. While they haven’t broken down, this is something that should be monitored as it may be giving us a bit of a “heads up” as to where we are going next.


Written By
Alan Penny

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