New Record High Reinforces Bullish Momentum
Gold remained strong on Wednesday, rising a new all-time high of $4,643. A daily close above $4,635 will confirm strength indicated by the new high breakout, while short-term support is at Wednesday’s higher daily low of $4,588. Wednesday’s session is on track to end at its highest daily closing price for the trend. That would provide another indication of strength and a continuation of the long-term bull trend.
Post-Breakout Pullback Confirms Trend Strength
The first pullback following a base breakout in December above $4,381, found support near the 20-day average at the beginning of the year. On Monday, a sustained rally above the prior high at $4,550 confirmed a continuation of the bull trend. Today, strength was confirmed by a new high and new daily closing high.
Resistance Zone Defines Next Upside Test
There is a potential resistance zone noted on a chart from $4,664 to $4,713, where three target levels show from three measurements. This only means that the zone represents a potential resistance zone. Resistance may or may not be seen, and if the top of the range is exceeded, that will be a sign of strength. Above that range is a 361.8% projection of a measured move at $4,766.
Trend Structure Favors Sustained Advance
Since gold has only recently completed its first pullback after a significant breakout, there is the potential for a sustained trend. Short-term retracements will likely see solid demand as buyers look to join the trend. Nevertheless, they will be watched closely for indications of strength or weakness. Lower declines and faster recoveries will indicate strength relative to deeper or longer corrections.
Moving Averages Highlight Key Support Levels
Key dynamic support for gold is reflected in the 10-day moving average, now at $4,485 and the 20-day average at $4,439. Since the 20-day line was clearly an area of support during the last retracement, it has been identified by the market as a key trend indicator. Short-term support is at the 10-day line. It has less significance now, until the trend gets going. But the 10-day average was confirmed as support recently over three days, marking it as a trend indicator to watch going forward. Other price levels to watch for signs of support during a pullback include the two recent swing highs at $4,550 and 4,381.
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