Gold Price Forecast – Consolidation Bias is HigherGold has been within a pennant triangle consolidation (blue) since its August 6 all-time high of $2,074 per ounce in the spot market. The resolution to this pattern will set the stage for gold over the next 1 – 3 months. The bias for the gold market remains upward.
Pennant Triangle Consolidations
Pennant triangle formations feature a series of lower peaks, converging with higher lows.
Triangles typically represent pauses amidst a longer-term trend. The majority of triangle patterns resolve in the directional bias of the prior trend leading up to the pattern. In this case, that bias is upward.
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To arrive at a target calculation for a pennant triangle, we may add the amplitude of the consolidation onto the apex point. Note that gold’s pennant triangle has an amplitude of $212 (black), measured from the peak of August 6 down to the low of August 11. In this case, we arrive at a target calculation of $212 + $1,948 (apex) = $2,160.
This target should be expected to be achieved within three weeks of a break of the upper declining trendline (blue), which presently comes in at $1,985 and declining by the day.
Note that on rare occasions, pennant triangle consolidations may fail to break in the bias of the preexisting trend. In order to avoid this outcome, gold should not witness a daily close below the lower rising (blue) trendline, which presently comes in at $1,920 and rising. Under no circumstances may gold close below the recent August 21 swing low of $1,915 in order to maintain the bullish bias.
Takeaway on Gold
Gold is within a neutral pennant triangle consolidation, a pattern which serves to work off excess enthusiasm from the previous advance.
On a break above the declining upper boundary of the consolidation, presently at $1,985, gold will target $2,160 over the coming weeks. At www.iGoldAdvisor.com we are positioning for this higher outcome, while maintaining daily close stops at the lower rising boundary of the pattern, presently at $1,920.