Gold Price Forecast: Upside Breakout Reaches Four-Week Highs

Gold triggered a weekly bullish continuation signal today as it rallied above last week’s high of 2,041. Thursday’s high of 2,051 was a four-week high and an upside breakout further strengthened the bullish case for gold. A daily close above the four-week high of 2,045 is now possible. In addition, a weekly bullish signal gold is on track to end the day at its highest daily closing price in 19 days, and decisively close above the 50-Day MA. It is also on track to close above the downtrend line for the second day in a row as well as close above the uptrend line for the first time. These are all new bullish indications for gold that support the thesis for higher prices.

Weekly Bullish Signs

In addition to the weekly bullish signal, gold triggered a breakout from a large symmetrical triangle consolidation pattern today. It is an approximately three-month consolidation pattern. Today was the first bullish trigger. Further confirmation of strength is now needed. A secondary entry to the triangle breakout occurs on a rally above the 2,058-swing high from February 1. Once the second entry trigger occurs, the chance for a bullish continuation improves.

Symmetrical Triangle Target

We can derive a target from the triangle pattern by measuring the height of the pattern at its maximum distance and then adding that price change to the breakout level. When doing this a potential target of 2,189 is revealed. This target is approximate as the measures are not perfect, but they should be close. This week’s previous high of 2,041 is being used for the breakout level.

Next Potential Resistance Targets

Nevertheless, there are several price levels for earlier targets, prior to a breakout to new record highs. The first is the 2,058 swing high noted above, which followed by the next higher swing high from December at 2,088 (B). Short-term weakness should see support at or above the 50-Day MA, which is currently at 2,033. It happens to be marking a similar price level as the downtrend line. Also, today’s low of 2,028 is critical in the short-term. Given the potential significance of today’s bullish price action, short-term weakness will be watched carefully by traders to either enter or add to positions.

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