Gold Price Forecast: Maintains Strength Within Consolidation

Gold stalled its advance on Friday but is on track of maintaining support around the 20-Day MA. A bullish breakout of the 20-Day line triggered on Thursday. Today, gold traded in a narrow range but successfully tested support at the 20-Day MA with the day’s low of 2,417. This a minor bullish sign as prior resistance is being tested as support, which is part of the progression of an uptrend. However, since gold is bouncing within a larger consolidation pattern the potential upside continuation of the bounce is a question.

Maintains Strength from Thursday’s Rally

There has only been one strong up day since the 2,364-swing low from Monday. Today’s narrow range shows a clear slowdown in momentum. Whether momentum continues to slow or not remains to be seen. At the time of this writing gold is on track to end the week at its second highest weekly closing price historically. That is a sign of strength.

Also, the weekly chart is set to end with a bullish hammer candlestick pattern. This is a more powerful pattern when occurring at a swing low and when not inside a consolidation range. However, it does indicate underlying strength for this week. Nonetheless, gold is heading up into a potentially significant resistance zone highlighted by the double tops of 2,478 and 2,484, the record high.

Heading Towards This Week’s High of 2,459

A breakout above today’s high of 2,437 will provide the next bullish signal with a target at Monday’s high of 2,459, which is also a weekly high. Notice that from Tuesday onward gold traded inside the range from Monday. This has characteristics of price consolidation as this week’s price action is contained within support and resistance from last week.

Monday’s low was at 2,364. As of that low gold has formed a symmetrical triangle pattern. Given its positioning near the top of the trend it looks like an upside breakout is the most likely resolution. But this means that gold may consolidation for a while longer as it fills the triangle

50-Day Line Key Support

The 50-Day MA has converged with the lower line of the pattern and it sits at 2,371 current and marks support along with the trendline. Since a symmetrical triangle can break either direction, the potential for a downside move exists. If that occurs the first lower target is 2,347, which will complete a falling ABCD pattern.

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