Spot gold is trading firm after a spectacular early morning reversal on Tuesday. Earlier today, the market briefly pierced yesterday’s low but a major trader came in with enough buying power to reach a new intraday high. Aggressive short-covering also helped drive spot gold from $3983.54 to $4104.05.
Tuesday’s move has brought the focus back to the short-term retracement zone at $4072.40 to $4041.65. Overcoming this area will bring us closer to forming a potentially bullish secondary higher bottom and put the minor retracement zone at $4162.36 to 4214.34 back on the radar.
If the momentum is strong enough to overcome $4214.34 then it could easily challenge the 50-day moving average at $4333.30.
On the downside, the inability to sustain today’s early reversal or overcome any of the key resistance levels will mean the market is still in the strong hands of the short-sellers. This could lead to retest of $3983.54, $3942.10 and an eventual breakdown under the long-term support at $3886.46.
Another thing that would help this market sustain a rally would be if buyers started aggressively taking out offers instead of just passively bidding. If you’re day trading, you should be watching for that price action. And if you’re trading for longer-term moves then you would like to see this type of buying interest in order to get out of this tight trading range and into more open spaces on the charts.
Warsh Stayed Hawkish but the Data Moved
Warsh’s first Congressional testimony as Fed Chair landed in a very different room than the one the market expected 24 hours ago. Monday’s setup had crude running, yields rising, and a hot CPI looking likely. He was supposed to walk into a room where the market was bracing for a hawkish message. Instead the CPI took the urgency out of the conversation before he started talking.
Source: Original Article
