Gold: There's reasons to buy into weakness

Carol Harmer Charmer Trading

GOLD

I covered our long Gold position because as it struck 1326 it just did not want to stay up there, and the lower close after making for Gold a new Yearly high was a bit disconcerting so I covered longs at 1321 and look again....Gold needs to break this 1326 area to stand a chance of trading higher. Can we break it when the market is so overbought... I don't think so...but remember these indicators are exactly what they say...an indication...but if you look at the price action as I always do, you get to know when something has had enough.....Now this isn't to say Gold isn't going to keep going higher...There is a very good chance that it will...but not yet...You want to be looking around the 1302/1294 band before going long if we lose 1313...

If we do get down to these lower levels then we do have a very good chance that the market will have unwound the overbought scenario...come back to more neutral levels and off we go again..

I do not see at this point Gold crashing through the floor....Remember...it is set against the $...but it is a currency in its own right...and when we have had $ move Gold has gone with it....so it does not necessarily follow the $....so just be aware of that...

So the downside is set...If we lose 1287 we rethink Gold...but if this support band holds there is a reason to buy into weakness....Todays Daily Pivot is at 1317and this currently has been the low....It also ties in with our short term 23,6 fib at 1318....Gold can also move sideways to unwind overbought conditions....if we move sideways we should hold 1313 to 1326..A break of 1326 and I see 1333 to 1344 as a short term targeted area...

Author

Carol Harmer

Charmer Trading

Carol Harmer has over 39 years experience of analysing and trading the world's markets and is undoubtedly one of the most respected technical trader in the world today.

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