Gold Price Forecast: Bullish Short-term on Rise Above to New Trend High

Gold advanced to a new short-term trend high of 2,670 on Wednesday before encountering resistance that led to an intraday pullback. The 61.8% Fibonacci retracement level is at 2,671. So, arguably the retracement was completed today. Gold is set to provide a new bullish signal with a likely daily close today above the 50-Day MA at 2,652. There has not yet been a daily close above the 50-Day line since the recent higher swing low from mid-December was established at 2,582. A stronger bullish indication would be seen on a daily close above the prior trend high and last week’s high at 2,665.

Short-Term Trend Advances

The advance above the 2,665 high today triggered a continuation of the short-term rising trend. However, the new high breakout needs to be confirmed with a daily close above that high. Notice that the 61.8% retracement level is not far below the downtrend line, another area of potential resistance. The big question is whether demand in gold can continue to strengthen enough that it can break out above the downtrend line. If it does rise above it and stay above it, gold then has a shot at taking out the recent swing high for the current correction at 2,726. That is a lower swing high, and a bullish reversal signal would trigger with a rise above it.

Rising in Bearish Channel

Until then, gold continues to trade within a bearish declining trend channel. This means that there remains the potential for the current advance to hit resistance and turn back down. However, the higher swing high in mid-December provides one clue supporting an eventual bullish resolution. Nonetheless, if today’s high is exceeded to the upside, potential resistance is around the downtrend line. The 78.6% retracement is also nearby at 2,696 and it can provide another guide.

Interim Swing Low Support at 2,615

Potential support areas to consider start with the nearby 50-Day MA at 2,652. Today’s low is at 2,645 and the 20-Day MA is at 2,640. An interim higher swing low and successful test of support at the prior declining trendline (dotted) was established on Monday at 2,615. That swing is part of the near-term uptrend price structure. A narrow trendline was added to the chart connecting that low. It shows an increase in momentum as the slope of the line has increased relative to the lower rising line connecting the December swing low. Therefore, a drop below 2,615 would be more significant than higher price levels. Once that price level fails the 2,582-swing low is at risk.

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