Has Gold Bottomed Out?

Gold is a hot topic that can be discussed by all different types of people right around the world. Children dream of finding golden treasure that will make them rich beyond their wildest dreams, miners work overtime to dig up acres of land in search for the precious metal and others participate in the speculation of gold through a marketplace in search of a profit. So let's take a detailed look at Gold to see what the chart's telling us so you can be more informed about what to expect from Gold prices in the near future.

On the 1st November Gold was looking bearish as it strongly broke down through the key level of 1,200. Gold has since rejected that major support and resistance level and this week has rallied strongly and now sits around 1,260. The Daily chart illustrated below shows that Gold is now in a confirmed uptrend after making higher highs and higher lows. 

The Weekly chart shown below has also moved into an uptrend with a higher low and a higher high now set. As you can see on the charts, the momentum is starting to move to the upside after rejecting the 1,200 level.

It's all very well analysing the charts and watching price move one way or the other, however our job as traders is to profit from these price movements so let's take a look into how we might do this. Once we find a trending market (Gold) we then want to use our trading strategies to gain an entry into that market. At Trade With Precision we use 3 different trading strategies to gain an entry into a trending market. What we will do is search down through the lower timeframes until we find a trade setup. We are looking for a timeframe that shows a nice smooth trend with optimal chart structure. Take a look at Figure 3 below which is the 240 minute chart. Price has started to trend with smooth price action pulling back into the buy zone (area between the 10 and 20 period moving averages) and then moving away again for another leg to the upside. Price has most recently had a strong move away from this buy zone and it looks like we may now be pulling back into that buy zone. If we get a pullback into the two previous highs at around 1,244 that would be a great spot where we might start looking at gaining an entry long into Gold. 

We will be keeping a close eye on this chart into the end of this week and early next week to see if this situation plays out.

Happy Trading!

Regards,
The TWP Team