Gold market plunges: Opportunity or trap?

I woke up this morning to find that gold has almost regained its losses, while silver is still down 11%. But what’s the significance? This is just a process of cooling the market; the market is manipulated, and whether the decline is large or small, the result is the same. The good news is that after these turmoils, market volatility has dropped significantly, and it is no longer the previous pattern of 800-point fluctuations in a single day.

More importantly, this correction looks to me like a natural rest period after a big move higher. With local markets closed for holidays, international markets may take advantage of this opportunity to offer buying opportunities at lower prices. In particular, this week’s non-agricultural data was postponed to February 11, which provided a rare period of calm for the market and also gave us a good opportunity to invest.

📉 Technical analysis: Closed in the “gyro” pattern, the key level has not been broken
Gold closed yesterday in a “spin top” pattern, a small bullish pattern with long upper and lower shadows. Price touched 5091 and tested 4859. Interestingly, 5091 lies within the 5050-5150 resistance zone, while 4859 specifically represents the 38.2% Fibonacci retracement level, a key level that has been tested repeatedly recently.

Although the market fluctuated significantly in the morning, it finally closed below the 5090 mark, indicating that the overall market is still in the consolidation stage and has not yet formed a trend breakthrough.

Today, affected by the sharp drop in silver prices, gold fell from 5023 to 4790, another round of serious market manipulation. However, we also observe a gradual decline in volatility, setting the stage for near-term market convergence.

The main question today is how stable the 4859 level is. This level is not only the reversal point from top to bottom in the past two days, but also the intersection of the daily Bollinger Bands line. Its importance is obvious.

📍Short-term strategy: Continue the short-selling strategy below the trend line.
The hourly chart structure we mentioned yesterday proved to be valid once again during the US trading session, indicating that the market continues its trend towards lower highs and lower lows.

If the price falls below the psychological “5000” mark, we can pull back slightly and focus on trendline resistance in the 4970-4978 area. If the price rebounds to this level, it can be considered a good opportunity to short, with downside targets of 4859-4800.

As for other indicators, in a market with such volatile sentiments, relying too much on them can distract you. Therefore, holding on to key levels and executing your plan is the best way to navigate the current market.

✨The last sentence: The market is constantly testing human nature, and market adjustment is an integral part of this process. Don’t let temporary highs and lows affect your strategy; calmly observe market trends and wait patiently for opportunities.

💬Share your thoughts in the comments section: Are you affected by this market correction? Do you expect it to increase or decrease in the coming period?

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