Gold continued to hover above support on Tuesday represented by the top trendline (blue) that covers the recent consolidation phase. Today’s low of 2,504 successfully tested the line again and it was followed by a bounce. That is a sign of strength in a developing uptrend, particularly relative to the prior pullback, which found support at the top boundary line of a symmetrical triangle (purple) consolidation pattern three days ago.
Gold is set to close strong, in the upper quarter of the day’s price range, at the time of this writing. Therefore, it may finish the day with a bullish doji hammer candlestick pattern. And it may end today at its second highest daily closing price on record. Yesterday’s closing price of 2,518 is the current record daily close.
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Grinding Higher
The path of least resistance for gold continues to be up. It triggered a bullish breakout of a symmetrical triangle pattern on August 16 and has been largely consolidated since and slowly showing sign of strengthening. Also, notice that the purple 20-Day MA has been rising and is close to breaking out above the top triangle line (purple). The orange 50-Day MA converged with the internal uptrend line on July 25 (C) and it continues to track the trendline closely. This tells us to pay attention to these moving averages as gold progresses into higher prices.
Triangle Target Points to 2,605
There are several initial upside targets to pay attention to. But let’s start with the higher initial target marked by the measuring objective from the symmetrical triangle pattern. As with most consolidation patterns, we can measure the height of the pattern once fully formed, then add that distance in price to the breakout level. For gold, that provides a minimum anticipated target derived from the pattern at 2,605. Moreover, there are two earlier target levels to be aware of, at 2,543 and 2,566.
Support Above 24.71 Needs to be Maintained
Regardless of how bullish the chart looks for gold there is always the potential for a pullback before attempting higher prices. Near-term support is at last week’s low of 24.71. That is also a minor pullback that makes up part of the rising short-term trend of higher swing lows and higher swing highs that starts from the July swing low.
Source: Bruce Powers FXempire
