Bullish Above 2,335
A decisive breakout above 2,335 will provide the next sign of strength that may give gold a chance to keep rising. Last week’s high of 2,388 is also critical as a move above it would trigger a weekly breakout and a rise above the most recent interim daily swing high. Gold began an attempt to breakout from the rising parallel trend channel in early April, which eventually failed with the decline below the line on June 7. It has since traded below the line, putting it at risk of a deeper retracement than what has been seen currently. A second upside breakout of the channel has a chance to keep going if momentum can be maintained once triggered.
Bearish Below 2,296
The bearish pennant will trigger with a drop below its lower boundary line, but the recent minor low of 2,296 can be used as a clearer signal. Also, a drop below the three-week low of 2,287 will confirm the breakdown.
Possible Double Inside Week
Unless gold can rally above last week’s high of 2,342 before the end of this week, it is on track to complete the week as an inside week. As it stands now gold has an inside week setting up this week and an inside week last week. It shows price contraction, which is typically followed by a spike in volatility. Which direction it heads in will be signaled by a breakout of the pennant pattern. The pennant would indicate that a breakdown is more likely, however, that would change if support continued to hold and is followed by a bullish breakout instead.
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