Is It the Right Time To Buy Gold?
NB: THIS ARTICLE WAS WRITTEN ON THE 19TH MARCH, 2021
In short, yes, I think now is probaly a LOWER RISK opportunity to get into gold again.
There are no certainties in the markets of course, but I think at its current level Gold has corrected to a level that we can make a strong argument for seeing a reversal back to the upside.
Let's just take a step back and assess what our edges are in this mid-term swing trade on the popular safe-haven commodity.
Rising Trend Line Bounce - Technical
Bullish Engulfing Candle on Daily Charts - Price Action
Horizontal Key Level Bounce - Price Action
38.2% Fibonacci Level on Weekly Charts - Technical
Scarcity - Fundamental
I don't want this blog to be a long thesis, and it's mostly self-explanatory, so I'm just going to fire through these quickly for clarification.
Technicals & Price Action
As we can see on this weekly chart below, the price has been bouncing quite consistently off this rising trend line, shown with white dashes. A move below that would disprove the case for a long trade. The pink dashed line shows the 38.2% Fib level that is commonly viewed by the market as a key level for price to bounce off.
On the daily chart below we can also see more clearly that the price has also coincided with the horizontal key level at 1672, where it formed a bullish engulfing candle, telling us that there were more buyers looking to influence the price at that specific level.
Fundamentally It's Good To Be Long Gold
Ultimately there is a finite supply of Gold on the planet, which means that as long as Gold is a desirable commodity and the population continues to grow, the price of Gold will rise.
Managing The Trade.
On this trade we've got the Fib level, horizontal key level, rising trend line, and bullish engulfing pattern to measure an overall key zone in the market. Anywhere below here (1672 level) and I'd say you've got a good price zone to assess whether your trade logic is still valid, if it breaks below that then you could potentially short Gold with your stop loss above this same level, but my preference is to the long side on this trade. Personally, I'm placing 2 positions, one targeting just beneath 1770, and the other targeting to the moon as high as I can ride it before I have a signal that the trend has ended.
Let me know if you take the trade.