Gold prices suffered heavy losses overnight and fell to its lowest level in close to four months. Safe haven investor appetite has diminished with signs of US economic improvement and a more politically stable Ukcarine causing money to flow out from safe haven commodities such as Gold and Silver.
The chart below shows the price of Gold forming a symmetrical triangle over the past 3 months. The lower support trend-line was breached yesterday with a dominant bearish candle showing strength in the bears conviction to drop prices.
After such a strong move down it is possible that the price may steady and retrace back up towards the bottom trend-line which would then be expected to act as resistance. I see this area as being a good place to consider a short position.
In this situation I will sit on the sidelines and wait for an appropriate signal to trigger a short trade such as a bearish candle stick pattern at the resistance level to indicate that bears have re-gained control to push the price lower.
Happy trading
Flavio
GOLD / US DOLLAR
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