(MENAFN- Daily Forex)

• I review gold's recent reversal and question whether the market has peaked.
• Despite strong past momentum, fading rallies and heavy volume at the highs suggest exhaustion, with deeper corrections possible if support levels fail.

The gold market initially did rally a bit during the trading session on Tuesday, but has given back those gains to actually turn negative toward the end of the day. Because of this, it looks a lot like a market that is going to roll over, and I have to ask questions at this point as to whether or not we haven't peaked. After all, you can see that there was a lot of volume at the top a couple of weeks ago, and this suggests to me that perhaps we have a problem where traders typically will get a little bit parabolic. Things will collapse one day, they'll make another run higher, but they will fail. I'm watching the $4,200 level because if we do not make it above there, I think gold may have peaked.

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I know that goes against the narrative, but it was weird because just a couple of weeks ago, I was told gold was going to like $8,000 or something, and the US dollar was going to zero, and then gold dropped 10 to 12%, and suddenly there was nothing. So, I think at this point in time, it'll be interesting to see how this plays out, but I am starting to really look at this through the prism of perhaps an exhausted market and a trend change.

EURUSD Chart by TradingView

A breakdown below the 50-day EMA opens up the possibility of a deeper correction to the $3,800 level and then eventually the $3,500 level. The 200-day EMA sits just below there, and anything below that level really gets ugly. At this point, you could look at this as a buy-on-the-dip market, but you have to be very quick to bail out if the position goes against you.

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