Up until recently, we had been speaking about shorting gold on the blog. Price was sitting at a major higher time frame resistance level and the opportunity was there to manage our risk around it.
But then the US launched missiles into Syria, tensions on the Korean peninsula escalated and most recently, the French elections all threw a metaphorical spanner in the works.
So does this shift in the geopolitical landscape to a more risk off environment mean that gold becomes a buy?
Taking a look at the daily chart, you can see that price has broken above the higher time frame resistance level that we were looking to use as a risk management level for potential shorts.
With this level now gone, should our thinking change with it? If you’re in the ‘trade a level until it’s broken’ camp, then the answer would be yes.
Zooming in to the hourly chart, you can see that after breaking above the higher time frame resistance level, price has now pulled back to retest it this time as support.
This could be viewed as confirmation that the level has in fact held as support and now you would look to buy any short term pullbacks. One such pullback that I’ve marked in green on the hourly chart above.