Stage is Set for the Bulls
The stage is set for gold to approach the $3,500 price area and the potential for a new record high for gold. Nevertheless, there is also potential resistance at $3,491, which is an initial upside target for a rising ABCD pattern (purple). If current bullish momentum is sustained into the $3,491 to $3,500 price zone, it would not be surprising to see some signs of resistance around that price zone, either consolidation of a minor pullback.
Weekly Chart is Bullish
What strengthens the bullish argument more clearly is evidenced in the weekly chart (not shown). Gold is set to establish a record high weekly closing price and confirm a five-week bull breakout with a closing above last week’s high of $3,403. This is bullish behavior on the larger timeframe and enhances near-term upside potential. Initial new highs targets start with a 127.2% projected target for the rising ABCD pattern at $3,557.
However, that is a target from a relatively short pattern, and it may be easily exceeded. A little higher will be the 127.2% extension of the more recent bearish retracement that followed the $3,500 record high. It points to $3,603. The completion of a large rising ABCD pattern (orange) shows an initial target of $3,664.
Bounce off 20-Day MA is Bullish
The fact that support was found around the 20-Day MA (purple) on three out of five days this week, is a bullish indication. It is confirmed by the subsequent acceleration in bullish momentum, which continues today. Gold has set up a potential launching pad for reaching new highs. Given growing uncertainty globally and bullish technical pattern, bullish sentiment in gold could see a sharp spike in the precious metal upon breaking to new high prices.
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