Gold's former breakout line becomes support!

OANDA:XAUUSD   Gold Spot / U.S. Dollar
Back in January, I made a call that gold was likely to break to the upside. It did, and proceeded to rally much further than I targeted. In the past few weeks, however, gold has since faltered and has been dealt a fast and precipitous move to the downside.

Fundamentally, gold should be well supported here as the Fed has essentially telegraphed that they are not afraid to let inflation rise. Their fear du jour is simply that any action they take in terms of hiking rates will be met with sharp declines in the stock market. Essentially, their hands are tied and inflation will likely creep higher before they bother to do anything about it.

Technically, gold has collapsed through its relevant daily moving averages and we are in 'catch a falling knife' mode. However, frequently past trendlines stay relevant and, as illustrated in the chart above, I believe the trendline that was once resistance will now be support.

It's as good a place as any to buy gold .

Buy GC or GLD here @ 1288 (in the futures )
Target 1: 1301
Target 2: 1311
Stop: Below the trendline (currently around 1281).

Trade active: Tested the trendline once again and bounced. I am of the belief this trade will play out over many days and we may see one more test of the line before we see strong buying.
Comment: The line was tested again in the overnight session.
Comment: The line has proved useful. $3 away from Target 1
Comment: Target 1 hit. Closing the trade on here but keeping it on in my account for Target 2.
Trade closed: target reached
Comment: Nearing target 2 in the overnight session.
Comment: Target 2 reached.
interesting support line but with most support they eventually break, i think 1 more leg down to 1265
+1 Reply
I see more temporary downside than upside.
@gvoommen, what would be your downside target?
gvoommen TradeWithAdam

We are in minor wave E which will go down in the form of a-b-c decline from the high of $1341.
My targets are $1275 to $1241.
+2 Reply
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