The gold markets fell hard on Wednesday, and even blew through a substantial support level at the $1,650 mark. The market certainly looks as if it will continue to sell off, and as such we are not willing to buy at this point.
If you have been watching our videos, you know that the plan was to see the market fall and find support. The problem is that we haven't seen the support or bounce, and as such we have been simply waiting. However, when you look at the big picture; you can't sell this market as it is still in a massive uptrend. With this in mind, we are leery of selling gold as it has been so strong for the last ten years.
The next area that could produce serious support is the $1,600 level. The $1,500 level is a massive support level in our eyes, and it is at that point that we have to rethink the gold market altogether. Until that gives way, we would rather be out of the market than risk selling in a massive super cycle to the upside. If we are wrong, it is simply a missed trade. However, if we are right, then we save much of our trading capital, and that is job #1 for any successful trader.
It is the worth of the Dollar that will continue to push this market around, and that should be paid attention to as well. The breaking of the hammers from the last couple of sessions certainly is a bearish sign, and if forced - we would sell, but as we are not, we are simply ready to wait out the move and look for larger areas to hold as support. The $1,600 level is the first place we will look for hammers or bullish engulfing candles that signal a move forward.
The fall has been brutal, but this happens from time to time in this market, and this is why we are so cautious as these $50 Dollar moves can cost a trader quite a bit in a very brief amount of time.
Gold Forecast March 15, 2012, Technical Analysis
Gold Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3