By Greg Holden – Gold prices have been on a rollercoaster ride these past few trading days. Following the announcement by the US Federal Reserve of a new round of quantitative easing, now known as QE2, the price of gold immediately climbed to a recent high of $1,424.10 an ounce. However, the subsequent profit-taking action across the market at the start of this week has driven the US dollar much higher while simultaneously pulling commodity prices downward.
These price swings in gold’s price have caused a stir among market participants, many of whom have profited greatly by capturing these movements with their new Gold Trading Accounts, now available at ForexYard.
As we can see in the chart below, there are two bullish trend lines interacting with one another, creating a distinct bullish channel. As the price climbed towards the upper border of this channel we have witnessed a strong technical reaction resulting in a massive sell-off.
Additionally, technical indicators on the RSI and Stochastic (slow) show a build-up of sell pressure on Gold. The first support level to be tested during this correction is near the $1,382 price mark, while the second, stronger support level rests near last week’s psychological barrier of $1,340 an ounce, with a potential pause occurring near $1,360.
Traders operating with our new Gold Trading Account may wish to take this opportunity to go short on Gold until it reaches a safe turning point, likely to occur somewhere between $1,360 and $1,340. Afterwards, this precious metal will likely continue its bullish streak.
Gold – Daily Chart
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
