As we have discussed in the past,markets never announce themselves. With gold rallying this morning, thequestion is: Is this a dead-cat bounce or the start of a rally? There is no wayto know; however, establishing the support level is the key at this point.
For the last few days, we havebeen watching the $1,235 -1240 level and have stated that we would stay longuntil those levels were violated. There have been a couple of attempts to breakdown, but each time buyers stepped in.
With this morning's rally, we arewatching the support levels of $1,235-$1,240 but also the resistance levels of $1,248-$1,250.The action around either one of these levels will help us decide what willhappen next. We have no interest in being short gold but will close longs below$1,235 until we can identify a new buy level. For now, we will remaincautiously long.
By Todd 'Bubba' HorwitzContributing tokitco.com
Follow @Bubba_Trading