Follow-through will be a Key Indicator
Follow-through from here will be key. There is upside potential if today’s high is exceeded as it should be gold back above the trendline and further confirm a failure of the bear flag. A top purple parallel line is shown on the chart for the top of the flag. Although a sustained advance above the trendline would indicate strength, a rally above the recent swing high at 2,721 would be needed to trigger a bullish reversal of recent bearish correction.
Bullish Momentum Kicks In
Today’s bullish momentum follows a breakout of an inside week pattern that triggered on a move above 2,657 yesterday. A bullish reversal on the weekly chart would support the possibility that gold can continue to strengthen in the near-term. The 2,721-swing high is a five-week high. It seems likely that if upside momentum is sustained above today’s high, gold has a shot at testing and therefore possibly exceeding that swing high. It is worth noting that today’s advance also exceeded the 2,686-swing high from September. That provides another clue that the buyers are starting to get more aggressive.
Pullback Could Find Support at 50-Day Line
Nevertheless, further consolidation leading to greater market uncertainty could also occur. As noted, additional signs of strength will be needed if gold is to have a chance of reaching the most recent swing high. A pullback from today’s high could see support around the 50-Day MA. How gold behaves around the 50-Day line should provide clues as to strength or weakness. That line can be watched along with the recent minor swing high of 2,666.
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Source: Gold Price Forecast: Momentum Builds as Gold Surpasses Key Resistance Levels
