Navigating Gold’s Bullish Path: A Breakout on the Horizon

Gold Forecast Video for 27.11.23 by Bruce Powers

Gold strengthened today following an upside breakout of yesterday’s double inside day, and it closes relatively strong, in the top quarter of the day’s range. When combined with price action of the past prior two days a small potential bullish pennant appears. Looking at the pattern this way provides some additional clarity as to price levels and the potential for an upside breakout.

Bullish Pennant Pattern

A pennant pattern is a small symmetrical triangle consolidation phase that follows a rally. Preferably, the rally prior to the pennant is sharp and fast as it reflects strong demand prior to consolidation. Such strong demand should show up again upon an upside breakout. In the case with gold, an upside breakout is first triggered on a move above today’s high of 2,004. Further confirmation of strength is then triggered on a rise above the top of the current minor trend high at 2,008, and then again on an advance above the 2,009-trend high. Given the size and shape of the pennant, a breakout should occur within one to three days.

Bullish Weekly Signal Confirmed with This Week’s Close

A bullish weekly signal was triggered earlier in the week as gold advanced above last week’s high of 1,993, and the week ended relatively strong, in the top quarter of the week’s range. This further supports underlying strength in gold and increases the chance for a bullish continuation. If so, the first target zone is from 2,024 to 2,030, and consists of the 78.6% Fibonacci retracement and 2020 peak, respectively.

Trigger Needed First

The pennant pattern is not valid until it triggers and therefore gold remains open to short term downside risk. Weakness and a bearish signal would be indicated on a drop below today’s low of 1,991 and further confirmed on a decline below the two-day low of 1,989. Support would subsequently be indicated at or above this week’s low of 1,965.

Given that a breakout above the trend high is relatively close to the first target zone mentioned above, if momentum is strong enough gold could breeze right through it. If it does, then it next targets previous swing highs of 2,070 to 2,082 from 2022 and 2,023, respectively.

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