The gold market has rallied a bit during the early hours on Wednesday as the market continues to see a lot of noisy behavior in general. This is a market that has a lot of external pressures put on it.
Gold Technical Analysis
Gold daily candlestick chart. Source: TradingViewThe gold market has rallied a bit during the early hours on Wednesday as we continue to see a lot of noisy behavior, but I also recognize that we are in a bit of a potential range. With this being the case, you have to understand that the $5,000 level looks to be a major floor while the $5,500 level could be a major ceiling. Anything above there would be very bullish.
The fact that we have bounced a little bit has been interesting as market participants have been very bullish for the longest time but now have seen a couple of really nasty candlesticks. I think a lot of what happened on Tuesday had to do with the U.S. dollar, but ultimately the same reasons that pushed the dollar higher could very well end up pushing gold higher. Therefore, I don’t wish to short this market.
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A Potential Double Top
Whether or not we can bounce and continue to go higher from here remains to be seen. You can make an argument that perhaps we are in the midst of trying to form a double top, but I think it’s a little early to make that decision as to whether we should think about a trend change.
I still like the idea of buying dips, but I also recognize that the volatility picking up means that you need to be very cautious with your position size. This is the only thing that you can control in an environment like the one we are in now.
Source: Fxempire
