Gold markets have gone back and forth a little bit in the early hours of Monday as we continue to hang around the $2,900 level. That being said, you should also start to look at the chart through the prism of whether or not we are forming a bullish flag. It does look like a bullish flag at least so far, and therefore I think a lot of buyers will continue to be attracted to this market.
Even if we pull back, the market is likely to continue to see the 50-day EMA below as significant support as it is right at the bottom of the flag near the $2,820 level. Short-term pullbacks should be buying opportunities in gold, which of course has done quite well for quite some time. And this little bit of consolidation does make a certain amount of sense, considering that we have to digest those gains.
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If the market were to break higher and maybe above the $2,950 level, then that kicks off the bullish flag thesis and it could open up a move all the way to the $3,300 level before it’s all said and done. I would expect the $3,000 level to offer a little bit of resistance though, I don’t think we just slice through there without options traders having their say.
In general, though, the best way to look at this chart is that gold’s in a significant uptrend and gold has been in a significant uptrend for some time. So therefore, there’s no need to fight. I like buying only, not selling, and I like buying on dips even more than buying here.
Source: Christopher Lewis FXempire
