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Pennant Breakout at Risk
The bull pennant has not failed yet, it is just getting off to a slow start and that is a concern. Nonetheless, what happens next will be important. A decisive rally above today’s high could lead to a test of the next target area around $2,961. Further up is a target derived from a long-term price pattern that began in 2022 and points to $2,982. Subsequently, a price zone from $3,012 to $3.043 marks the confluence of four targets. Since they are relatively close together, it may be most useful considering it as a range of potential resistance.
Top Channel Line Provides a Guide
Another guide is provided by a trendline across the top of a bullish trend channel. The potential resistance zone starting at $3,012 is in the price area around the top trendline. Also, notice that when considering that line along with the near-term uptrend line a rising bearish wedge type pattern is indicated.
Gold could rise towards a test of resistance near the top line and still hit the higher resistance zone before breaking above the line. As a matter of fact, the $3,012 price line is crossing the trendline today. An interesting coincidence or is the market telling us to watch that line? Let’s see.
Below $2,919 is Short-term Bearish
Given support at today’s low of $2,919, a decisive drop through that low opens the possibility of gold testing support around the lower end of the pennant consolidation pattern. Tuesday’s low of $2,892 provides a proxy for the line as of today. However, last Friday’s low at $2,877 is a minor interim swing low and therefore has greater significance as it is part of the bullish price structure.
For a look at all of today’s economic events, check out our economic calendar.
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