The candlestick itself is neutral, but it is also at a major historically important level, so I think you need to look at it through that prism.
The 50-day EMA sits just below the bottom of the daily candlestick, and it suggests that there could be a little bit of support underneath. If we were to break down below that level, it would say a lot more than the initial rally started during the trading session. The fact that we gave back quite a bit does suggest that there is more trouble out there than people are aware of, especially as inflation is still running at about 3 1/2 times what the Federal Reserve wants.
With that being the case, it’s probably only a matter of time before gold sells off, but if we were to break above the highs of the trading session on Wednesday, it’s possible that the market could go higher, perhaps reaching the 200-day EMA above. Breaking down below the bottom of the candlestick for the trading session on Wednesday shows that perhaps the market has peaked, at least for the short term.
Ultimately, the market is likely to continue to see a lot of volatility, but it should be noted that we are still very much in a downtrend, although we are trying to break out. If we do break down from here, the $1750 level underneath would be a potential target. The candlestick itself is neutral, but it is also at a major historically important level, so I think you need to look at it through that prism. Until things change, the gold market still needs to prove itself from a longer-term standpoint. At this junction, I believe that the next impulsive candlestick will tell us where we are ready to go for a bigger move.
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