(MENAFN- Daily Forex) The Gold markets did very little during the day on Friday as we continue to hover around the 50 day EMA. However, there are a multitude of technical factors right now working in this market that could have a massive influence on where we go next. Not the least of which of course is the mass of bullish flag that I have drawn on the chart. I admit, there is a certain amount of artistry when drawing these patterns, but they do tend to work out over the longer-term.
Even if you don't believe in the bullish flag, the downtrend line is most certainly apparent at what would be the top of the flag. It currently sits just above the $1500 level which of course is a large, round, psychologically significant figure, so quite frankly breaking above that would be a sign of strength anyway. Beyond that, the 50 day EMA is sitting just below that area so it would then begin to offer support, it would be a simple continuation of the bullish pressure that we have seen for so long. Ultimately, I think this is the most likely of scenarios as fundamental certainly line up in favor of gold.
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Speaking of fundamentals, quantitative easing is coming to a neighborhood near you. The Federal Reserve has begun more quantitative easing, although they say don't call it that, while the Chinese continue to pump liquidity into their economy. Beyond that, the European Union looks set to be as easy as possible as well, as Germany is on the precipice of sinking into recession. All of these things lining up quite nicely for gold to continue going higher, and although we have had a significant pullback, roughly 38.2% at the low, it's been a very orderly pullback. This hasn't exactly been anything along the lines of panic selling. With that in mind, I do think that we eventually break out to the upside and clear that downtrend line. Various targets above that I see include the $1540 level, and the $1560 level. If this bullish flag does in fact kick off and turn out to be true, it measures for a move to $1800, which has been a longer-term target of mine for some time. As far as the downside is concerned, I would revisit things at the 50% Fibonacci retracement level, but we have a long way to go before that happens.
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