(MENAFN- Daily Forex) Gold markets went back and forth on Wednesday as we have finally seen stability in a market that has been absolutely crushed over the last couple of sessions. At this point, it looks as if this trendline that I have drawn on the chart is trying to hold, so the neutral shape of the candlestick is probably something worth paying attention to.
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The very neutral candlestick suggests that we are about to make a“binary decision”, so it could set up a nice trade. I would anticipate that more likely than not, we are going to see a break to the upside, but I look at that as a potential selling opportunity if you are patient enough. Rallies at this point would more than likely struggle with the 200-day EMA, and perhaps even the 50-day EMA. In that scenario, I am looking for signs of exhaustion that I can start selling. Obviously, I would have to take this on a day-by-day basis, because eventually you would have to change your mind if it continues to rally. In the short term, though, I think any rally will be looked at as a bit of short covering more than anything else.
On a breakdown below the bottom of the candlestick, I think that opens up a move towards the $1750 level, perhaps even down to the $1725 level. That would be a continuation of the negativity that we have seen and could be exacerbated by a strengthening US dollar. Obviously, we will have to pay attention to the currency markets as well, but you should also pay close attention to the fact that Thursday is Thanksgiving, so it is a bit difficult to imagine that we are going to see a tradable event during the day, as it will be somewhat limited electronic trading on the futures exchanges. Keep in mind that some CFD brokers will stay open even though the futures markets are closed at various points in time, so that does make quite a bit of danger just waiting to happen. Friday will be a shorter day as well, which might be reason enough for gold to get a little bit of a short-term bounce, although I would not expect it to be a sudden change.
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