Gold Price Forecast: Bull Wedge Breakout and Price Targets

Today’s bullish follow through in gold is not too convincing for the long side short term. Gold had a decisive breakout of a bull wedge yesterday and it closed near the high of a long-range green candle. More than 61.8% of yesterday’s advance was retraced today before support was seen at the 8-Day MA with a day’s low of 2,166, leading to an intraday rally. A new record high of 2,212 was reached earlier in the day but the close will likely complete below the open thereby generating a red candle.

Target from Wedge is 2,320

Nevertheless, yesterday’s breakout was strong and the first day of a new swing. We can calculate a measuring objective to help determine a target from the bull wedge formation. In this case we’re going to consider the sharp rally (pole) before the wedge formed as a measured move. The idea being that a similar rally may occur following the breakout of the wedge, like when there is a bull pennant or flag. The low of 2,039 from March 1 starts the pole and it ends at the recent swing high at 2,195. Just because there is a target, however, doesn’t mean it is reached in a direct fashion, although it could be.

Support Seen at 8-Day Moving Average

The measure for the pole starts at a low on February 29, which is when a breakout triggered, and bullish momentum kicked in. It gives us an upside target of 2,320. Finding support today at the 8-Day MA is bullish and should end the retracement before higher prices. If it does not and there is a deeper retracement before new highs or there is a daily close below that price level, the near-term bullish outlook can be maintained till 2,146 at the lowest. That is the bottom of the wedge and if gold drops below there it shows a failure of the pattern to follow through on the breakout.

ABCD Pattern Target is 2,298

In addition to the target from the wedge pattern there is a large rising ABCD pattern progressing that hits the first target at 2,298. That is at the high end of the Fibonacci price zones highlighted on the chart. Since both the wedge and ABCD pattern point to the top of the second Fibonacci price zone, it would indicate that there may only be temporary resistance seen around those price zones.