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Consolidation or Pullback May be Next
Moreover, the next potential resistance level on the chart is $2,940. That leaves a bit of a gap above the $2,889 price level to the next target. Gold will be in a better position to fill that gap and make a run for the next higher target price once there is a rest of some degree, either taking the form of a deeper pullback or consolidation. Gold has had a strong run rising as much as $300 or 11.6% since completing a swing low at $2,582 (C) in December.
On a relative performance basis, that is the strongest upswing of the prior eight and reflects strong underlying momentum. But it also indicates that at least a temporary high may have been reached, for now. The full upswing, beginning from the November swing low at $2,537 (A), had a gain of as much as $345 or 13.6%.
Further Weakness Indicated Below $2,834
A drop below today’s low of $2,834 will signal further weakness and increase the chance for a deeper pullback. The recent breakout level and prior trend high at 2,790 becomes a potential support area and has a good chance of being tested, at a minimum if a pullback deepens. If support is tested around that price level and it is followed by a bullish reversal, that will be a sign of strength and could end the correction, if it comes.
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