Gold Price Forecast: Bullish Rebound as Buyers Defend Key Support

Gold successfully tested support on Wednesday near a trendline. A pullback below Tuesday’s low found support at $2,864 before the buyers took back control. Subsequently, an intraday rally followed, reaching a high for the day at $2,909. At the time of this writing gold is trading in the top third of the day’s trading range, which starts at $2,894.

Moreover, if it closes in the top third of the day’s price range it will likely complete a bullish hammer candlestick pattern. In this case, the pattern would be indicating bullish momentum rather than a trend reversal, which is where it is commonly used. Also, today’s closing price will likely be the second highest closing price for gold historically. Monday’s closing price at $2,912 was the highest.

Bullish Hammer Setting Up

Although today’s decline triggered a breakdown below Tuesday’s bearish shooting star candlestick pattern, the bullish reaction today may negate that signal. Nonetheless, near-term price levels look relatively clear. Today’s low of $2,864 is short term support. If broken to the downside the trendline will also have failed to retain support and lower prices become targets.

This week’s low at $2,853 is a key price level as it is part of a series of six consecutive weeks of higher weekly highs and higher weekly lows. A change in that bullish weekly pattern may provide a clue to That bullish pattern may begin to change once that pattern starts to change.

Near Term Resistance at Monday’s High of $2,912

On the upside, a breakout above today’s high of $2,909 will show strength, but Monday’s high of $2,912 should also be considered. It was resistance on Monday, which had the highest historical closing price at $2,907. Tuesday’s record high in gold was $2,943.

The advance completed a couple targets there were derived from Fibonacci extension and projection targets. Therefore, resistance was seen in a price area that could lead to a pullback. Nonetheless, if the $2,943 high is exceeded higher targets start with $2,961, followed by $2,982.

Channel Shows Possible Higher Target

Furthermore, notice that there is a trendline across the top of a large parallel trend channel. The line was confirmed with the recent swing high at $2,790. It also shows the possibility of higher prices if Tuesday’s high can be exceeded.

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