Ultimately, this is a market that is building up enough momentum to make a bigger move, and now it is only a matter of watching the various levels to decide which way to follow. 

Gold markets rallied a bit on Friday to reach the $1950 level, an area that will be important to pay attention to not only because it is considered to be a “midcentury mark”, but it is also an area where we have seen resistance previously. If we can break above the $1950 level, then it is likely that this market will continue to rally from here.

Looking at this chart, if we can break above the $1950 level, then we could go looking to the $1970 level. The $1970 level is an area of resistance as well, so once we clear all of that, I would anticipate that gold could very well find its way to the $2000 level. This is an area that will cause quite a bit of headline noise, and I think volatility. However, we have sliced through there previously, so I do not necessarily think that it will be difficult to make that happen again.

The 50-day EMA sits at the $1914 level and is rising. It has been a dynamic support level for quite some time, so I think at this point it is likely that we would see plenty of interest if we do drop towards that area. Underneath there, the market has support at the $1900 level, which is a large, round, psychologically significant figure, and an area where we have seen buyers previously. In fact, I believe that this support level extends down to the $1880, so if we break down below all of that, then gold would be in serious trouble.

While we did attempt to rally on Friday, I would also point out that we are in a potential descending triangle, and I believe that the next day or two will be crucial as to where we go next, so keep an eye on that. The US dollar has its effect on this market as well, so make sure to pay attention to the US Dollar Index. Ultimately, this is a market that is building up enough momentum to make a bigger move, and now it is only a matter of watching the various levels to decide which way to follow. If you are a short-term trader, then the range-bound trading in this market has been a blessing.

I do believe that given enough time, we could go back to the ₹77 level.

The US dollar initially fell against the Indian rupee during the trading session on Thursday but found support near the ₹75.50 level as we have seen multiple days in a row. Ultimately, this is a market that has been in an uptrend previously but then pulled back to show signs of exhaustion. Now we are dancing around the same region for the last several days, which suggests that we are trying to build up a bit of a base for continuation.

It is worth noting that the 50 Day EMA is slicing right through the middle of the candlestick for the Thursday session, which ended up being a hammer. The ₹76 level is at the top of a hammer, and it is an area that has been difficult to break above recently. By breaking above there, it allows the US dollar to continue going higher, with an eye on the ₹76.25 level, and then the ₹76.50 level. The market continues to favor the greenback overall, although the pullback was somewhat significant.

With interest rates rising in the United States, that does put a bit of bullish pressure on the greenback, and you see that in multiple markets, not just this one. That being said, the market is likely to see a significant amount of noise overall, as the US dollar is not only seeing higher interest rates but it is also used as a safety instrument, as emerging market currencies are considered to be further out on the risk spectrum. That is especially true with the Indian rupee, which needs global growth to really get moving.

On the other side of the trade, if we were to break down below the hammer during the trading session on a daily close for Friday, then it could be a sign that we are going to go looking to the ₹75 area, which the 200 Day EMA is racing towards. Nonetheless, things look bullish at the moment, or at the very least that we are trying to build a bit of consolidation. Because of this, the market favors a breakout soon, and I certainly would be willing to jump on that breakout when it happens. This is especially true if it is to the upside. I do believe that given enough time, we could go back to the ₹77 level.