How to Trade Gold Today: Pro

Bart Sadowski | E+ | Getty Images

Japan rebounds and China disappoints, as U.S. stocks forge ahead. So what does this mean for the metals?

Gold traded to a lower high overnight heading into Friday's nonfarm payrolls report, reaching only as high as $1,417.70. Investors and traders raised bets on gold through the week, keeping prices stabilized above $1,400 for much of the time. As uncertainty came into the market and equities were under tremendous pressure, gold once again became a safe haven currency. But the market could still not extend itself above major resistance, or close above that all-important $1,413.20 level.

(Read More: Gold Eases as Payrolls Data Fuel Fed Speculation)

When the jobs data fell in line with expectations, the stock market enjoyed a major bullish reversal, and gold was once again seen as less attractive. The selling pressure resumed, and gold retested major support at $1,380 to $1,383, running stops and reaching a low of $1,377.10 on Friday.

As I mentioned on the "Futures Now" blog, the close is very important, and gold was able to maintain much of its price action back above support and saw an electronic close of $1,383. Much of this session's trade has been sideways, but the session high has come in right against resistance, and the market is now trading $10 down from there.

(Read Rich's previous post: Pro: This Will Determine Gold's Next Move)

This shows a heavy market. Look for a test to the next support level at $1,370 to $1,372.30. Bulls can look to buy the first test but should keep in mind that the bears seem to have control today. A close below $1,380 and $1,383 will indicate a bearish continuation.

Only a close back above new highs of the day at $1,388.40 to $1,390 will neutralize the sell-off.

Good luck, and good trading.

Rich Ilczyszyn is founder and CEO of iiTrader. Follow him on Twitter: @iiTrader.

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