Further Signs Retracement Complete

The recent retracement from the new 2,212 record high hit last week found support at a low of 2,157 last Friday. In addition to the area around the 8-Day line denoting support, the 2,157 low was also at the 78.6% Fibonacci retracement and a top trendline beginning from the swing high on May 1. The relationship with the top trend line shows the market recognizing the price zone represented by the line. This is bullish behavior in an uptrend as prior resistance is now being shown as support. The way should be clear for gold to continue its ascent.

Breakout Signal Above 2,200

Nevertheless, a signal is needed to confirm the bullish thesis. That will be provided on a decisive breakout above yesterday’s high of 2,200. A slightly earlier sign will be given on an advance above today’s high of 2,198.

Gold Remains Above Previous Record High

Gold continues to trade in new high territory above the prior record high of 2,135 from December 4. And it has remained strong enough to not fall back to test that price area as support. In the near-term, it is working on following through from the bullish breakout of a small wedge pattern. When taking into consideration the sharp advance that proceeded the wedge consolidation, a potential upside target can be calculated. The sharp advance began upon the breakout of a large symmetrical triangle pattern on February 29. Counting from that day’s low, a sharp 8.2% six-day advance followed. A similar rise following the wedge breakout would put gold up at 2,320.

Pullback Complete

The first pullback following the wedge breakout last Wednesday should now be complete. But, as noted above, there needs to be another bullish confirmation signal. Once that triggers gold should be heading into two initial potential target zones. The first begins at 2,235 and the second at 2,277. A large rising ABCD pattern completes at 2,298, and as noted above the wedge pattern target 2,320.

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