Gold Breaks Out to Reach a 3-Week High

Gold Forecast Video for 03.05.23 by Bruce Powers

Gold is starting to look like it is getting ready to go higher as it breaks out of an inside week and 10-day consolidation pennant. A pennant being a small symmetrical triangle. As noted at the end of last week gold had already matched the consolidation pennant that started off the March 20 swing high as far as shape, with time on the horizon. Today, on the 11th day, gold again breaks out to reach a three-week high. Might gold have similar performance as seen following the last breakout from April 4?

Last Pennant Breakout Similar

Following the April 4 pennant breakout, gold was up as much as 2.9% at the 2,049 high. A similar percentage move would see gold at 2,064, just shy of the all-time high of 2,070. Certainly, higher prices are possible from there as well.

As with the first pennant breakout, a minor retracement and test of support at the top of the pennant will provide a good area to watch for bullish setups. If that opportunity presents itself gold should then be ready to move away from its 34-Day exponential moving average (EMA). Similar price behavior occurred in the impulse move off the second March bottom.

34-Day Line Trend Indicator

It is interesting to note that the 34-Day line is today touching the lower trendline of the pennant. That is the first specific test of support at the 34-day line since gold when back above it in March. It may represent another piece of evidence for the completion of a consolidation phase that leads to a continuation of the uptrend.

Momentum Trendline Break Bullish

A breakout of the RSI above its downtrend line will provide another sign of strength, as well as a daily close above Tuesday’s 2,019 high. Let’s take a quick look at the first impulse wave in the current uptrend, which began from the swing low in November. Might it tell us something about where we are now? That first advance started with a sharp rally and was followed by a rising consolidation phase. And then again, another sharp rally. The current advance may just be continuing in its rising consolidation phase prior to another sharp advance.

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