The volatility is going to be a problem going forward, so the most important thing you can do is keep your position size reasonable so that you do not incur massive losses on some type of panic spike.
The downtrend line sits just above there, and I think it’s only a matter of time before we see signs of exhaustion that we are going to start shorting. If we break down below the bottom of the candlestick, then it’s likely that we drop down to the $1620, an area that has been important a couple of times.
Ultimately, I think this is a market that breaking down below there could open the floodgates and we could go down to the $1600 level, eventually down to the $1500 level. The $1500 level courses psychologically important, so it will attract a lot of attention. Furthermore, I think that we will have to pay close attention to those interest rates in America, because if they collapsed, they could send gold higher, at least for short-term rally.
All things being equal, we must ask whether this “triple bottom” is going to hold, or are we going to continue forming the descending triangle? This market is a great example of just how confused the overall markets are now, as we continue to see a lot of panic every other day it seems. The volatility is going to be a problem going forward, so the most important thing you can do is keep your position size reasonable so that you do not incur massive losses on some type of panic spike. Regardless, we should eventually get some type of clarity, but it does not look like we are going to get it anytime soon and of course the Federal Reserve has several speakers coming out this week, so they could through the market into a tizzy as well.
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