After tumbling to its lowest level since August on follow through selling after the release of the FOMC minutes, gold found support at 1625 and rebounded strongly in the evening session to close above 1650 on Friday.
This price action formed a large bullish "hammer" candlestick on the daily chart, though we want to see further confirmation before declaring a bottom is in, as the pace of the decline from 1695 will have rattled the bulls somewhat and the chart remains very weak and vulnerable to further declines.
The recovery rally was stopped by the 200 DMA and the 50% Fib retracement of the sell off this morning - if the market sells off back below 1640, the hammer candlestick will be invalidated and further declines look much more likely.
However, a rally through the 200 DMA would be evidence that a bottom was in and higher prices ahead. Overall, the market looks weak and we see further falls as the more likely outcome at this point.
This price action formed a large bullish "hammer" candlestick on the daily chart, though we want to see further confirmation before declaring a bottom is in, as the pace of the decline from 1695 will have rattled the bulls somewhat and the chart remains very weak and vulnerable to further declines.
The recovery rally was stopped by the 200 DMA and the 50% Fib retracement of the sell off this morning - if the market sells off back below 1640, the hammer candlestick will be invalidated and further declines look much more likely.
However, a rally through the 200 DMA would be evidence that a bottom was in and higher prices ahead. Overall, the market looks weak and we see further falls as the more likely outcome at this point.
