Gold Price Forecast: Bullish Signals Drive Gold Higher, Eyeing Trend Continuation

Gold continued to strengthen on Wednesday as it rallied above Tuesday’s high to test resistance around the 2,721 November swing high. At the time of this writing, gold had reached a high of 2,721 for the day and it continues to trade near the top of the range. Therefore, it could reach a new high before the end of the day. The advance followed a successful test of support to the top of the down trendline that was exceeded yesterday.

Bullish Momentum Improves

Given the bullish behavior in the price of gold following last Friday’s swing low of 2,614 it is starting to look like the correction is over the uptrend can continue. Of course, additional bullish follow-through is needed to show sustainability of the advance. Today is the third day of gains since Friday and the rally has stopped at an obvious possible resistance zone.

However, it indicates a key pivot that will trigger a bullish continuation is triggered and held. Also, the possibility of a quick rally above the high followed a quick reversal back down should be considered. Particularly, since upward momentum began from the intraday bullish reversal last Friday.

Weekly Chart Confirms Upward Bias

The longer time frame weekly chart (not shown) is confirming bullish signals. An upside breakout was triggered on Monday as gold rose above the inside week pattern high at 2,657 from last week. Given the subsequent bullish reaction it looks like the market has recognized that breakout. Gold is currently on track to close strong with the week, especially if it can reclaim the swing high (B).

A daily close above that high would confirm that continuation of a developing rising ABCD pattern (green). Once the 2,721 (B) point is exceeded a bullish continuation of the pattern will be signaled. An initial upside target from the pattern is at 2,790 (D). That is right at the current trend high.

It took a little while, but now that gold’s momentum is improving along with technical bullish signals, it has the potential to see a sharp advance like what was seen in the initial leg up off the bottom in November. Next, let’s see where it ends the week and how that changes the patterns and adds clues.

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