Gold markets rallied during the session on Tuesday, as we continue to climb a short-term trend line to the upside. I believe that there are several reasons to think that perhaps the markets are ignoring global headline risks, but sooner or later those will come back into focus and drive gold higher if recent history is to be believed. There are a lot of issues with the North Koreans obviously, and it’s probably only a matter of time before they do something to push this market higher. I believe the pullbacks are buying opportunities, but if we can break above the $1237 level, this market should be clear to go much higher. We currently are building a significant amount of bullish pressure, so I think that the move could be rather swift, and could have go looking for the $1250 level above.
The uptrend line
While the uptrend line is rather stable, it is on the hourly chart. In other words, a breakdown below this uptrend line would necessarily be that difficult, but as long as we can stay above it, I think that building up your gold position in small increments is probably the best way to play this market for the breakout that’s about to happen. It really comes down to your risk tolerance, whether or not you want to start getting involved before the breakout, or waiting for confirmation. I believe that the $1220 level continues to be a bit of a floor, which is essentially the uptrend line on the daily chart that recently caused the bounce that we have seen. In fact, you can almost make out a “W pattern”, if you squint your eyes. That of course is a very bullish sign and a potential bottom in the market.
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