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Pattern of Rising Closing Prices
Since the current leg of the rally began following a minor pullback to $2,880, now an interim swing low, each new day ended higher than the closing price of the prior day, except for one. That is a pattern that might change if Thursday’s trading session ends at a price below Wednesday’s closing price of $3,023. Nonetheless, the pattern of higher lows takes precedence, and it remains along with the pattern of higher daily highs.
Parallel Channels
There are two rising parallel trend channels shown on the chart. One is highlighted and the other shown with two rising blue parallel lines. The top of the channels provides an approximation of where signs of resistance may be seen. The top line of the larger channel is now lower and therefore would be approached next. Notice that it is crossing a small confluence zone around $3,080 today. That confluence zone marks the next higher target area. The lower channel line adds to its potential significance as a resistance zone.
Near Term Support at $3,026
Irrespective of the possibility of gold reaching higher targets before a pullback, a drop below today’s low of $3,026 might change that. It would be a sign of short-term weakness, but what happened next would be more important. For example, is the decline continuing or is there a quick recovery and rising prices? The price channels can assist in identifying oversold and overbought areas. Notice that the relative strength index (RSI) momentum oscillator is in overbought condition as a top channel line is approached.
Likely Bullish Weekly Pattern
With one more day to the week, gold is on track to end the week in the top quarter of the period’s trading range. That would show strong bullish momentum on a larger time frame than the daily. If this occurs, then it would seem the next higher target zone may have a better chance of being reached next week.
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