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Three White Soldiers Form
The three-day advance took the form of the three white soldiers candlestick pattern, which primarily are part of a bullish reversal. Three tall green candles with a closing price near the highs, small or no tales, and sequential higher daily highs and higher lows define that pattern. It reflects strong demand during the three-day advance, with a likely upside continuation breakout. When combined with the breakouts of the two trend channels, the potential is heightened. Whether the bullish implications occur quickly or take a little time, however, remains to be seen.
Pi Ratio Reached
Resistance for the day was seen just shy of the 3.414% (pi) extended retracement of the short-term pullback that began from the February interim swing high of $2,956. Also, there is a long-term 250% extended retracement of the decline from the September 2011 high at $3,232, and it looks like gold may end the day very close to that long-term target. Nevertheless, since it is derived from a long-term pattern, it has potential significance, particularly when joined by other target levels.
Breakout to New High is Bullish
A decisive breakout above today’s high of $3,245 triggers a potential bullish continuation for gold. The next upside target is then around $3,300. At the same time, resistance could be seen either before or after a new high. Today’s low of $3,173 is the obvious near-term support level watch so far.
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