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High Hits Projected Target
The high for the week was a successful test of resistance at the 200% projection of a rising ABCD pattern that began from the August 2018 lows. It was also in the region of $3,335, which is the 261.8% extension for the bearish correction that began from the 2011 peak. Both price levels are derived from long-term patterns. So far, the targets seem to be recognized by the market. But given the sustained signs of strength, the quickening uptrend may continue.
Global Uncertainty and Gold’s Rise
Gold has benefited from rising global uncertainty and it may continue to do so. Therefore, a decisive advance above this week’s high of $3,358, has gold next targeting the $3,383 price zone as that is the 127.2% projection for a rising ABCD pattern (purple) that began from the February swing low (A). Then, a little higher is the projection for a recent small bull pennant pattern that triggered on Wednesday at $3,454. The 161.8% projection for the rising ABCD pattern is then at $3,498.
Strength Retained but Short-term Risk Remains
Although the rising angle of ascent in the price of gold is a sign of strong and growing demand, it also indicates that the trend may be extended with the risk of a correction increasing. The top of two rising trend channels were broken recently. Subsequently, a pullback to test support around the prior trend high of $3,246 and near potential support of a top channel line, would be normal and retain the near-term bullish outlook for gold. However, a decline below Tuesday’s low of $3,208 could lead to a deeper pullback.
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