Look at pullbacks as buying opportunities, and then build up your position as it works out in your favor.
Gold markets broke above the crucial $1820 level on Friday to end the year on a very good note. This is an area that has been very difficult to overcome for quite some time, and I think that the fact that we managed to do it finally suggests that we are ready to go much higher. I do believe that it is only a matter of time before gold goes much higher, perhaps reaching towards the $1850 level. After that, I could even see gold going as high as $1875, but that obviously would take quite a bit of effort.
The candlestick even closed at the very top of the range which is a very bullish sign, and I think it shows that we probably have quite a bit of follow-through just waiting to happen. When that happens, we are very likely to see more momentum pick up, especially as plenty of traders will be coming back from the holidays looking to play catch up. Beyond that, if we see the US dollar fall the way it looks like it might rise against a few other currencies out there, and that could also give gold a bit of a boost.
The 50 day EMA and the 200 day EMA currently sitting just underneath the $1800 level, so I think that is going to be your “floor in the market” going forward. If we were to somehow break down below there it would obviously be a major turnaround in the attitude of markets, but I do not necessarily think that is going to happen anytime soon. That being said, if it did, it would obviously be a very negative turn of events and could send this market reeling. Nonetheless, I think we have made our decision over the last few days, and Friday was simply a combination of all of that work. Keep in mind that the jobs number comes out on Friday, so this week could be a little bit choppy; but at the end of the day, we have picked the direction that we have been looking for and now you can make the argument for a decent setup finally. Look at pullbacks as buying opportunities, and then build up your position as it works out in your favor.
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