Monday, February 2, 2015

Technical Market Perspective For Gold

The metals are one of the most volatile but lucrative sectors of the market. The metals can provide enormous swings and thus provide huge trading opportunities from both a swing trade as well as intra-day trade perspective. Gold is a beast market with huge scary moves but they can also be incredibly rewarding when you're on the right side of the order flow. With that said, it is very important to read the higher time frames to figure out the path of least resistance. As usual, here is our top down perspective for Gold beginning on a larger scale with the Monthly Bars:

With looking at this periodicity, we can see the market is trading within a large bearish channel with several tests of the channel's bottom. Finally the market found support at the 61.8% Fibanocci level from the key swing low on this chart. After a three month balanced behavior the market broke out to the upside and moved back into the previous balance area. A one time framing higher move to the bracket area high or a further imaginable move to the channel's top is probable. However, a potential resistance area is marked:

Moving forward to the weekly chart, we can observe a one time framing higher market that occured for three weeks and ended in the previous week. Technically is a rotational market behavior between the two marked support/resistance levels possible. Bear in mind that this market is a beast and could break these levels with ease.

If we look at just the weekly EMA chart, we can see the established bullish short-term trend with support at the 50EMA:

Looking a the daily perspective, we can observe a bullish channel and a potential balance area. The chennel's bottom served several times as support and brought the market to the upper level of this channel. Two days ago we tested the channel's mean and yesterday we found support to close as an inside bar. The market need to break the previous high for a possible re-test of the bracket top.

Observing the plain EMA chart, we can see the intact bullish short-term trend with support at the 20EMA (green line) level. Today we opened above the 5EMA as well as the 10EMA but there wasn't much support.

With all the mentioned informations here we could conclude a developing bullish market with a current balanced behavior in the daily bars perspective. As mentioned a break higher should lead us to the daily bracket high. Everything can happen here, so be open minded and react to market generated informations. We could also extend our analysis process with the Time Price Opportunities (TPO) Profile or the Volume Weighted Average Price (VWAP) charts but more is sometimes less. Anyway, if you don't know about these tools please take a look into our trading glossary or visit our community to learn more.

Stay happy!

All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.