Gold remains in a tight consolidation between 2,471 and 2,532, with support holding and potential for an eventual bullish breakout targeting 2,605.
Both today, Wednesday, and yesterday, gold tested support around the top of a symmetrical triangle consolidation pattern. Each time the price of gold was rejected to the upside as support held. Gold is on track to close in a relatively strong position, in the top half of the day’s range. It was the same as yesterday. And if it can close above the 20-Day MA today, currently at 2,489, that will be an added, although minor bullish clue.
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Stuck in Tight Consolidation
Nevertheless, gold remains stuck in a tight consolidation pattern from 2,471 to 2,532 and going nowhere it looks like until it breaks out. Consolidation followed the bullish breakout that triggered a continuation of the long-term uptrend to a new record high of 2,532 three weeks ago. Gold has struggled since yet remains in a constructive pattern pointing to an eventual bullish continuation of the trend. It can continue for longer in a similar position, above the top line of the symmetrical triangle pattern (purple) and below the 2,532 high and retain a bullish posture.
Deeper Pullback Indicated Below 2,471
There is always the risk of a deeper pullback and that would be first indicated on drop below 2,471. However, the top line of the triangle pattern needs to also be considered. Since the line is declining, it may represent a slightly lower price level than the 2,471 minor swing low when reached. If broken to the downside there are a couple weekly price levels to watch for possible support. The first is at 2,450 and is also a swing high and record high at the time, and the second is at 2,424.
Triangle Objective Points to 2,532
An upside breakout in gold would be triggered above 2,532, signaling a continuation of the long-term uptrend and the breakout of the triangle pattern. Measuring the triangle provides a potential target from the breakout of 2,605. On the way there is an interim target of 2,566, which completes a long-term rising ABCD pattern with the CD leg extended by 161.8% of the price change in the first AB leg up. How gold behaves around that price level will be telling as to whether there may be signs of resistance around that price level.
Source: FXempire
