Bearish Daily Behavior
At the time of this writing, gold is likely to end the day in a relatively bearish position, negative for the day and in the lower half the day’s trading range. This could indicate that more consolidation may occur before a successful bullish continuation of the trend occurs. That is fine and could be healthy as it allows more time for underlying demand to grow.
A continuation of rising ABCD pattern was triggered this week on a rally above a prior interim swing high at $3,366, and a trendline marking dynamic resistance for the recent bearish correction. That is long-term bullish behavior, but it will depend on the follow-through.
Upside Breakout Dominates
Since the bullish breakout on Monday, gold has consolidated above the declining purple support line in a relatively tight range. This shows demand being retained overall. Support for the three-day range is at Tuesday’s low of $3,333 and a new resistance level was established with today’s high of $3,339. However, given the outside day from today, this pattern could continue to expand with either false upside or downside moves. However, since Monday’s upside breakout was confirmed with a daily close above the $3,366 swing high, an eventual upside continuation remains most likely.
Bullish Continuation Above $3,339
A decisive upside breakout above today’s high leads to another interim swing low at $3,439. That is followed by the record high of $3,500 from April. That high price area represents an initial upside target zone for gold since a rising ABCD pattern completes nearby at $3,491.
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