After failing to breach a critical level of 1350, Gold has been falling steadily since 14th July and has fallen to its current level at 1284.80. Since Gold has fallen so much, is it time to go short? Let’s analyse the daily chart.
Firstly, in the medium term (3 to 6 month period), gold is moving more sideways than trending downwards. This means there are no strong and obvious directional bias yet.
Secondly, there are 2 important support levels, 1280 and 1260 just under current price level. (please see attached daily chart) These 2 levels have acted as bother support and resistance and go all the way back to Jul last year. Since gold is in a sideways mode, it is harder to tell if sellers will gather enough strength to break support. (I doubt bears will break support right away)
So what’s the trading plan then? For directional traders, it would be more prudent to observe how Gold behaves at support before jumping in. If support is really taken out, then we can start looking for shorting opportunities.