Range Resistance May Slow Advance Toward Highs

Together, the above indications point to a likely continuation of the bull trend as gold heads towards the record high of $4,550. However, despite the clear signs of strengthening, gold remains within a trading range established by a wide range bearish red candle from December 29 that formed following the high. It represents a range of potential selling pressure, which could impact momentum in the current advance and lead to further corrective behavior for the precious metal. This is not a prediction but rather a pattern to be aware off that could hobble the attempt at new highs.

20-Day and Channel Support Reinforce Bull Trend

Regardless, dynamic support for the bull trend was confirmed on Monday with a bounce off support near the 20-day average, which is bullish behavior at a key trend indicator. In addition, the recent pullback following a new record high was minor with support confirmed at the top trendline of a rising trend channel. It shows bullish momentum improving with as the overall rate of ascent increases. The fact that the 20-day line and top channel line – both long-term levels – also marked the same area of support near the pullback low of $4,274, is bullish behavior.

Confluence Zones Define Next Upside Targets

The first new high target zone is identified by the confluence of several indicator. An initial price range goes from around $4,664 to $4,713. Also, a little higher is a level at $4,766. Other than $4,687, which is the 161.8% extension of the recent bearish correction, the price levels are derived from long-term measurements. If the top level is eventually exceeded, gold looks like it will head to $4,942, which is the 450% extension of the 2011 bearish correction.

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