Gold – What Does It Mean?

10 Nov - Gold Weekly Chart


Hello Traders,

Hope you are doing well. This is just a quick update on this precious metal.

As mentioned on the 31st July (see article), Gold has been consolidating since mid 2013 and it has been testing a long term support level around $1180. Price broke below that level on the 31st Oct – a significant level and many are watching. But, last week, the weekly chart formed a low test pin bar – an indication that the bulls gearing up.

What Does It Mean?

Price action is about understanding the movement of price and we need to remember that candlesticks is just one part of the story. A pin bar after a break of a significant level shows that there is no follow through. Remember that the market is about crowd behaviour.

At this point in time, while there is a break, there is no crowd moving lower at the moment. Meanwhile, looking at the bigger picture, the pin bar last week did form a new lower low – an indication that the the bears are still strong.

If price does move higher and back above the 1180 mark, I can only conclude that price is making a correction before moving lower. However, if price breaks below the pin bar, we can expect a fall further and it might go on for a while.

With that, let’s sit back and see what we’ll get in the coming week as we start to move towards the year end.


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