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Resistance Zone Busted
In addition to continued bullish performance, today’s advance busted through a potential resistance zone that ended around $3,043. A daily close above that price level would provide another piece of bullish evidence for the trend. Once one price pivot is busted the next level becomes a potential target. The next higher price zone on the chart shows a potential price target around $3,078. That target is the 261.8% extended target for a rising ABCD pattern that began in November of last year. Notice that the target is also around potential resistance near two top trend channel lines. They can be watched as well since the $3,078 price level is nearby.
Bullish Weekly Pattern
Regardless of the potential for bullish continuation in the near-term, the price of gold is getting extended and due for a pullback or rest day or two, if not more. It remains to be seen whether a breakout through the $3,043 price zone will prevail or whether resistance will be seen before much more of an advance is seen. This week is set to be the third consecutive higher weekly high and higher weekly low, thereby establishing the weekly uptrend. Since last week’s high was $3,005, a weekly closing price above that high will confirm a bull trend breakout on the weekly time frame.
Support Levels
Today’s low of $3,023 is near-term support and weekly support is $2,982. A move through either of today’s price levels should help determine the next direction for gold. Rising trend channels are shown on the chart as they can assist in identifying when an asset may be overbought or oversold and targets. As with many consolidation patterns, once price is rejected from one boundary line of the pattern there is the possibility that price will eventually test the other side. Since the top two rising trend channels show upper boundary lines higher than current prices, the top lines become potential targets.
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