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Gold Forecast: Absorbs Recent Gains

By Christopher Lewis

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex...

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  • Gold has been fairly noisy during the trading session here in the early hours of Friday, but it does look like we are trying to stabilize.
  • Perhaps trying to turn things around and race back towards the highs.
  • After all, we've had a couple of days’ worth of sideways action at the moment, and that might be what the doctor ordered after the shot higher.

Perhaps just going sideways and working off some of the excess froth with more of an upward tilt makes quite a bit of sense and I think a lot of value hunters might be appreciative of any short-term pullback we get. If the market can digest the idea of hanging around the $3,800 level, which it has pierced, then we could eventually go looking to $4,000, although I think that will take some time.

Gold Forecast 29/09: Absorbs Recent Gains (graph)

Measured Move of Previous Triangle Hit

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We had previously been in an ascending triangle that had a measured move to the $3,800 level. And I think now that we've hit it, a lot of technical traders probably aren't quite ready to put a bunch of money into work. And quite often when you hit that technical signal of a measured move, there will be a little bit of hesitation, but it's also more likely than not, especially in a continuation that you not only hit the target, but you eventually exceeded. So, with this being the case, the market is likely to continue to see a lot of volatility and choppiness, but I still think it favors the upside overall.

I have no interest whatsoever in shorting the market, and I do believe at this point in time, at least the $3,700 level is a bit of a floor in the gold market at the moment. With this, we are looking at a “buy on the dips” scenario going forward.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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