Gold Price Forecast: Bullish Momentum Builds in Gold as New Resistance Looms

Gold trended higher on Wednesday as it advanced above yesterday’s high to a new record high of 2,790. However, trading continues near the highs of the day at the time of this writing, and a higher price may be reached before the close. If gold closes relatively strong, above the halfway point of the day’s range, which is at 2,780 if the high is final, a breakout of a rising parallel trend channel will be further confirmed.

Bullish Channel Breakout Confirmed

An initial breakout of the channel triggered yesterday, and the day closed above the channel line. As can be seen marked on the chart with red and green arrows, the area of the top channel line was hit as either support or resistance more than seven times, including most recently at last week’s high. Moreover, today’s low of 2,771 shows a successful test of support at the line and price was rejected to the upside.

Potential Resistance Sits at 2,797 to 2,815

Today’s bullish price advance puts gold in a good position to challenge the next identified potential resistance zone. It looks to begin at 2,797, which is the 200% extended retracement of the significant decline that began from the 2011 peak. Whether that relationship leads to resistance remains to be seen.

An initial target derived from measuring the recent bull flag points to the top of the range at 2,815. Along with a couple other price levels in between, a range from around 2,797 to 2,815 is identified as a possible price zone where supply may increase and stall the ascent or lead to a retracement.

Possible Time Symmetry Approaching

Regarding the recent bull flag pattern, since the first advance following the September 4 swing low ended after three weeks up on the weekly chart (not shown), the current second advance of the flag could do the same. After three weeks the potential for time symmetry exists as the two rallies will match after three weeks.

If this is to occur, it would be supportive of the possibility of completing the next identified targets this week. Furthermore, if the pattern holds, the high this week may be followed by a pullback or consolidation phase. If it does note advance would be getting extended based on time.

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