Advance Follows Daily and Weekly Pattern Breakouts
The extension in the uptrend to a new high in gold follows a breakout of a daily flag pattern and a weekly bullish hammer candlestick pattern earlier this week. Also, the 20-Day MA was successfully tested prior to the breakout follow-through day on October 15. Notice that the February 29 symmetrical triangle breakout also followed a test of the 20-Day line. It was tested as support for six days prior to the breakout day and it remained support. In other words, a test of support around the 20-Day line is an indication of strength that gets expressed with an upside breakout. Subsequently, gold accelerated gains.
Next Resistance Zone from 2,724 to 2,754
Following a daily close above the prior high of 2,697 to confirm the bull breakout of the trend, gold will be heading towards a potential resistance zone defined by Fibonacci confluence from 2,724 to 2,754. The top of the range is derived from a measurement over the longest time frame. Therefore, it can be considered potentially more significant. It is an extended retracement that is 2.5x the downswing that began in March 2022. The beginning of the confluence price range is the initial target from a rising ABCD pattern that begins from the February swing low (A).
Bull Flag Points to 2,815
Nonetheless, the recent bullish flag pattern points to a potential target around 28.15. This assumes that the pole of the flag begins at the breakout level of 2,532 that triggered on September 12. Whether it is reached or not it does indicate further upside for gold in the relatively near term.
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