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MENAFN- Daily Forex)
During the trading session on Monday, we saw the gold market rally quite a bit, which of course is a very bullish sign, as we had seen such destruction on Friday. Ultimately, we are still very much in an uptrend, and the $2900 level seems to be an area of contention. At this point in time, I think it is probably only a matter of time before we have to enter some type of consolidation in order to absorb some of the upward pressure that has been such a major factor here.
The trend has been very strong for a while, mainly due to the fact that there are a lot of people out there worried about the idea of tariffs slowing down global trade, so a lot of people have been using gold as a way to protect their wealth. Furthermore, debt is out of control in multiple countries around the world, and therefore it makes a certain amount of sense that a lot of people would look to gold for“real money” to protect their trading accounts.
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I think at this point it is pretty obvious that the best way to trade the gold market is to look for dips that offer a bit of value in what has been a very strong move to the upside. Ultimately, I think that the $2800 level underneath is going to continue to be very important, as there is a lot of“market memory there”, suggesting that what was once resistance should end up being support. Furthermore, the market will more likely than not pay close attention to the 50 Day EMA which is approaching that area as well and of course could offer a bit of technical support.
At this point, I just don't see any reason in trying to trade gold to the downside, as it has been explosive. However, it would not surprise me at all for the market to form some type of consolidation area in this general vicinity. I prefer to buy the dips, and trade this from one direction.
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