Gold has obviously been on a killer rally the last few weeks showing very little signs of weakness. The market has remained very buoyant about it’s mean value and not really diping down enough to our ‘buy zones’ to give us the opportunity to go long. We don’t want to go and just buy this market at this inflated prices, we really need to see a correction to an important level, then see a bullish signal develop before pulling the trigger.
Price has rallied straight up into an important resistance level where price has congested and consolidated during the last week. Early on during this asia session the market tried to breakout through this resistance level. It’s very odd for gold to breakout during asia, now London traders are online the higher prices are being sold off. The breakout is now collapsing back in on itself and driving back under that resistance level.
If the selling off continues and the previous day low is broken, then a bearish breakout trap and reverse trade will trigger. If this bearish scenario plays out we could be looking at much lower prices in the following weeks to come.