Gold Price Forecast: Breakout Eyes Uptrend Continuation

Gold’s bullish breakout of a descending channel and subsequent strong daily close on Wednesday improved its near-term outlook. Market activity levels are down today due to the Independence Day holiday in the United States. Nevertheless, gold is having a breakout week.

Short-term Uptrend Improves Along with Long-term

Considering the early development of an uptrend, a higher swing low was completed from the June 26 low. A series of higher swing lows and higher swing highs defines an uptrend. Therefore, once the 2,369 interim swing high is busted through, the development of the short-term trend is confirmed. Wednesday’s breakout was for the larger bull trend. The first bull signal was a breakout of the channel and the second will be a rise above the 2,369-swing high. Once a breakout occurs strength is subsequently confirmed on a close above the breakout level.

Watching for Confirmation Above 2,369

A daily close above the 2,369-swing high will confirm the bullish development of the short-term trend, which is impacted by the bullish long-term trend. This week’s change to the long-term uptrend is not only reflected in the breakout of the falling channel but also the bullish breakout of the 50-Day MA and a long-term rising trend channel line. The line was recognized by the market a variety of times since early-April as either support or resistance. Wednesday’s breakout is a new attempt to follow through on the initial bullish breakout attempt in April for this long-term pattern.

Measured Move Target of 2,530

From the first record trend high of 2,431 in April, gold had risen by 447.20 points or 22.5% in 41 trading days. That advance can be split into two sections. The first advance was 201.9 points or 10.6%, in 17 days and the second advance was 285.4 or 13.3%, in 18 days. There is time symmetry between the two swings and a number to keep in mind while watching the new trend develop, if it is to continue to do so. A rise of 10.6% from the most recent swing low of would put gold at 2,530.

Other Targets

Other higher targets, above the 2,450-record high, start with a long-term Fibonacci 161.8% extended target at 2,462. That is quickly followed by another long-term Fibonacci target level of 2,480. Nonetheless, the more significant target area is a price cluster from around 2,287 to 2,488. In general, areas of confluence, where multiple indicators point to a similar price, should be watched more closely as they tend to act like a magnet to price.

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