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Potential Challenge to Record High of $2,956
The recent bearish retracement to a swing low of $2,833 and subsequent rally puts gold in a strong position to potentially break out to a new record high. A new record high of $2,956 was established in late February, putting it in sight of the current advance.
The first new high target at $2,978 is established by a rising ABCD pattern that looks for price symmetry between the two recent upswings. It can be considered along with another target close by at $2,982. The next higher target above that price zone is at the 127.2% Fibonacci extension of the recent bearish correction at $2,990.
Weekly Breakout Confirms Strength
It is also significant that today’s bull breakout triggered a weekly breakout above last week’s high, which took the form of an inside week. A daily close this week above last week’s high of $2,930 will confirm the breakout on the weekly time frame.
Bearish RSI Divergence a Concern
Despite the bullish indications noted above, there is a concern about a bearish divergence in the relative strength index (RSI). It shows diminishing bullish momentum. In addition, last month ended with a potentially bearish shooting star candlestick pattern. So far, trading in March has been contained inside the $2,772 to $2,956 price range from February. As gold approaches the peak of last month’s price range it is at risk of losing momentum before a new record high. Selling pressure indicated by the monthly shooting star candle pattern shows the potential for increased selling pressure as the $2,956 record high is approached.
For a look at all of today’s economic events, check out our economic calendar.
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