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Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
On April 25th I discussed how gold had a critical decision to make.
The market needed to decide whether it was going to break below the trend line from the 2018 low or above the trend line from the year-to-date high.
You can see where sellers tested trend line support on Thursday.
However, the 1270 close kept the level intact as support; hence Friday’s bounce.
This is why it’s essential to wait for a daily close below support or above resistance before considering an opportunity.
That goes for any market, not just gold.
I have removed the 1280 horizontal level from my chart because, well, it doesn’t really matter anymore.
In my opinion, the two trend lines below are what will decide the future direction for gold.
That means this market needs more time to decide what it wants to do.
I will say, however, that this latest retest of trend line support is indicative of weakness.
Notice how gold has tested support twice in the last couple of weeks but failed to reach trend line resistance near 1290.
In other words, supply appears to be outweighing demand below 1290.
But again, patience is key here.
And given the vast amount of real estate below support and above resistance, there’s no need to rush an entry.
There will be plenty of opportunities following the break from this terminal pattern.
A daily close below trend line support would first target 1240. A close below that would expose 1215.
Alternatively, a close above trend line resistance would open the door to 1320 and perhaps 1350.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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