Gold Price Forecast: Breakout Above Key Levels Signals Strength

Gold triggered a bullish weekly reversal on Friday as it advanced above last week’s high of 2,347. The high of the day was 2,378 before it pulled back intraday. Gold is on track to end the week above last week’s high and above the most recent swing high at 2,352, further confirming strength. Yesterday, gold gave an initial sign of strength with a daily close above the 20-Day MA.

Today’s advance completed a 61.8% Fibonacci retracement of the recent decline around 2,373. Also, notice that today’s rally got above a top channel trendline and is set to close above it. That line represented resistance recently during the pullback.

Bullish Reversal on Weekly Chart

This could be the beginning of a bullish reversal that tests recent highs and potentially begins an advance to new record highs. The recent retracement stalled at a low of 2,277, which is near the 50% retracement of an internal upswing. However, when measuring a larger portion of the uptrend that starts from the February swing low, support came in above the 38.2% Fibonacci retracement.

A retracement to the 38.2% price level would also be relatively minor and reflect underlying strength. However, buyers were more aggressive and turned the price of gold back up at a higher price area. And momentum has been strong the past two days as the ascent began.

Price Levels to Watch on the Way Up

Price levels to watch on the way up include the three-week high of 2,389 and the 78.6% Fibonacci retracement at 2,398. There is then an interim swing high at 2,418 and the trend high at 2,431. An initial breakout above the top trend channel line triggered on April 8. But it failed to continue and led to the recent retracement. It is interesting to note that the market recognized that pivot as the two channel lines crossed at that point (circled).

Subsequently, the top lines acted as support for the next nine days as gold attempted to go higher. Watch for similar or more bullish price action once gold gets above both lines. It is now above one line. But that line is more significant as it measures the larger rising parallel trend channel.

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