Before you start reading my current analysis on Gold I would recommend you to read my previous updates on gold with all the subsequent updates here: Gold Price Action Reminiscence of 2013
Base on my previous analysis the market has still not reach my target as I projected a target of $900 by measuring the current wedge pattern that stated with Jun 2013 bottom, and I've projected that range to the downside giving me that number.
Usually Gold performs quite well during the beginning of the year as the Gold January Seasonal cycle is quite strong. January average gain since 1975 is 1.6%.Trading would be just too easy if the game is only about the seasonality but as we all know there are many other factors that impacts the market. Technicaly speaking we're still in a bearish trend and for a real bottom to take place we really need to shake out all the bulls, and gold has to look like it's dead in order for all weak hands to capitulate. In this regard I thing a move below the big psychological number will do the "trick".
The broad base dollar strength is going to keep putting pressure on the commodity market and gold continues to reflect the real deflationary trend that has engulfed in the entire world.
Figure 1 Gold Weekly Chart
From a technical perspective Gold it's at an important inflection point (see Figure 1) a big trend-line that connect all the highs starting from 2012. In the case the TL will give up we may see the seasonal cycles in place and repeat the process from last year where in the first half of the year we move higher and we crash back down during the summer period.
Right now it's a matter of a waiting game unless you're already in on the premise that current TL will hold as this is a great opportunity from an risk:reward point of view. However if the TL is broken and we got a strong close above it we can have our confirmation that the market is ready to push in the direction of that expansion and we can safety go long.
This is not a game about being right or wrong it's all about being on the right side of the market, just have a plan and trade accordingly.
Best Regards,
Daytrader21
