There is no doubt that the recent bottom-fishing bullish strategy on gold has been correct. As of now, the gold price has risen from 4400 to above 5000, an increase of over 600 points, reclaiming half of the space lost during the previous decline. As I stated, after the panic selling and sharp drop, a retaliatory rebound was expected, and indeed, the gold movement has aligned with this forecast. However, as the price has not firmly stabilized above 5100, we must remain vigilant about the possibility of a short squeeze.
Following two instances of finding a bottom and rebounding on Monday, I emphasized yesterday that the focus should be on positioning for a long view to gauge the strength of the upward movement. Reviewing the market action, after opening around 4670 on Tuesday morning, the price climbed steadily. The European session continued to break higher and then consolidated at elevated levels for an extended period. My assessment was that the resistance around 4950 would not hold; a breakout would lead to further significant gains, with at least another upward impulse expected during the US session following the strong consolidation in Europe.
Gold has experienced intense volatility recently, with movements of dozens or even over a hundred points being common on the 1-hour chart. Given this, most analysis can only provide a directional reference beforehand, as setting precise stop-loss and take-profit levels is challenging. Therefore, specific positioning should primarily follow real-time guidance based on the live market situation. For upcoming operations, the overnight pullback low was around 4880. The price rallied from around 4910 during the early Asian session today and is currently quoted near 5050. This level is relatively neutral, making immediate strategy calls difficult and stop-loss placement tricky. A reference approach would be to look for long positions on dips above the early session low of 4910. A break above 5100 would warrant further long positions. Regarding short strategies, attention should be paid to resistance at 5100; an initial approach to this level without a breakout, accompanied by the formation of a bearish pattern, could present a shorting opportunity. If the price firmly stabilizes above 5100, exiting short positions would be prudent. Specific entry levels will need to be determined based on real-time market conditions.
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