Gold’s Rally Strengthens, Similarities to Previous Rally Point to Upside Target

Gold Forecast Video for 04.05.23 by Bruce Powers

Gold continues to strengthen following yesterday’s breakout of a small symmetrical triangle consolidation pattern or pennant. It advanced above yesterday’s high and is on track to close above yesterday’s high today, thereby further confirming strength. A test of recent highs at 2,048/2,049 area seems assured and certainly a breakout to new trend highs is possible.

34-Day Line Key Trend Indicator Going Forward

During the recent pullback gold found support around the 34-Day exponential moving average (EMA) on multiple days. With the subsequent breakout, the recent bottoms are confirmed. This puts the 34-Day line front and center as a key trend indicator going forward. The recent tests of support of the 34-Day line is the first successful test since April of last year, when price first went below the 34-Day EMA after being above it for little while. This is bullish behavior for the developing uptrend.

Measured Move Shows Similarities

There are several methods that can be used to determine higher targets for gold. Today, we’ll look at a measured move and the relationship between the current advance and the prior advance that began off the November lows. There are some similarities that help provide an upside target for gold, assuming that there might be symmetry between the two moves.

First Rally Dynamics

That first rally, and the beginning of the uptrend, was 21.2% in 64 trading days. By comparison, the current rally, starting from the February 28 low, has seen a 13.5% rally in gold to the 2,049-trend high and is currently in its 46th trading day. Moreover, if the two rallies match, the current rally has completed 71% of time (46/64) and 64% of the move in price (13.5/21.2).

Impulse Moves Provide Outlook

There are couple of reasons to look at the relationship between the two advances. It starts with the relationship between the beginning impulse moves for each. The first advance off the November low was 10.5% upon reaching the 1,787-swing high. It occurred over eight days. The impulse move from the February low (using second low of 1,809) was similar at 11.1%, also in eight days. Following the impulse move at the start of the trend, each advance in gold consolidated in a rising pattern. We are currently in the rising consolidation portion of the current advance. A match between the two rallies occurs around a target of 2,093. That’s where the current advance matches the first on a percentage basis at 21.2%.

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