Gold’s Bullish Sentiment Begins To Ebb

Gold’s Bullish Sentiment Begins To Ebb, first-quarter rally appears to have run its course, with the precious metal now consolidating in a relatively tight range as bullish sentiment for commodities in general starts to ebb and drain away. In the last two months we have seen two key days of price action, which defines the current technical picture, with the first of these occurring February 11 and the second on March 4 -- the common theme being a dramatic increase in volume on the daily chart. On the first occasion, the market rose strongly on the day and delivered a volatility trigger with the classical response of subsequent price action reverting back inside the spread of the candle with no follow through -- trapping bullish traders into weak positions. This was as expected with prices duly languishing in this area for some time, until the second significant candle appeared on March 4, once again with ultra-high volume and no follow through into higher prices. This candle was duly followed with two pivot highs over the course of the next few days, as gold prices struggled to break through the $1285 per ounce area before sliding lower and reverting back to test the volume point of control, which is now balanced in the $1240 per ounce area, as denoted with the purple dotted line. Below we now have potential support building in the $1208 per ounce area and in early Monday trading, gold was testing the high volume node at $1220 per ounce. But if this fails to hold, then we can expect to see gold prices sell off once again and back to test the low-volume node now awaiting in the $1190 per ounce area.