Gold Price Analysis: Trendline Break Reflects Strength
Gold Forecast Video for 21.09.23 by Bruce Powers
Gold completed an 88.6% Fibonacci retracement of the prior uptrend today with a high of 1,947. That essentially matches the three-week high of 1,946 where resistance was seen previously. Also, resistance was seen off today’s high as an intraday pullback followed. Will be watching to see where gold closes the day for signs of short-term weakness or strength. However, today’s price action is bullish and represents the first clear sign of a possible change in character.
Today’s rally in gold sent it above the downtrend line that begins from the last peak prior to the top of the recent correction, and it will likely close above it for the first time. The stronger today’s close relative to today’s price range, the greater the confirmation of the breakout. A pullback will come but the higher price rises before that happens the more confidence it creates that the rally is sustainable and that today’s breakout of the trendline confirms the end of the correction. If subsequent price action continues to support that thesis, then traders will be watching for bullish setups during weakness.
Bearish Earlier in Session to Bullish
Moreover, today’s price action from earlier in the session is also supportive of the idea that bearish sentiment dominating price action is switching to bullish sentiment dominating. Gold first dropped below yesterday’s low for a short time today to a low of 1,928 thereby testing support of the 55-Day EMA. Subsequently, a bullish reversal followed leading to an upside breakout above yesterday’s high, as well as the trendline. Further, a triangle breakout occurred on the RSI oscillator reflecting the change in momentum.
Weekly Breakout Further Confirms Strength
Gold triggered a bullish breakout of a weekly hammer candlestick pattern on Monday and tested the three-week high of 1,931 today. Today’s bullish follow-through from Monday’s weekly breakout is what we would expect if the weekly breakout was sustainable and led to a continuation of the developing uptrend, off the August 21 swing low. A breakout above 1,931 will further support a bullish thesis for gold. The initial primary target seen on the chart is the completion of a rising ABCD pattern at 1,969.
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