Gold showed continued strength on Wednesday following a breakout above a short downtrend line and the 50-Day MA. It is on track to close at a seven-day high and above those two lines. Moreover, the day’s relatively narrow range of $3,328 to $3,359 shows support being found above the two trend indicators. They represented resistance for a couple of days until yesterday. This shows confirmation of strength indicated by the breakout.
Resistance Seen at 20-Day Moving Average
Resistance was seen around the 20-Day MA, now at $3,349, and it was on Tuesday as well. Tuesday’s high of $3,358 needs to be exceeded for the next sign of strength but a daily close today above the 20-Day MA will also confirm strength. That will put gold in a solid position to head toward an interim lower swing high of $3,396 and it looks likely to rise above it. That price level is also a weekly high. So, a breakout above $3,396 will give bullish signals on both time frames.
Recent High of $3,451 is Key Level
The recent lower swing high of $3,451 is the next important price level to assess the condition of the long-term bull trend. If sustained resistance is seen around that price area again, it could lead to additional consolidation before gold attempts another upside breakout. Nonetheless, the integrity of the bull trend has been retained overall, following a brief drop below dynamic support of the uptrend line and 50-Day MA.
Bullish Recovery
A recovery back into a rising trend channel (blue lines) that began on Tuesday is bullish behavior for the short-term and it aligns with the larger pattern showing strong bullish momentum. Therefore, there is the potential for upside momentum to accelerate if the $3,451 high is exceeded. This does not mean it will happen in the foreseeable future, just that it could. If the record high at $3,500 is broken then initial higher targets look to be around $3,578, $3,603, and $3,664.
Bullish Weekly Close Possible
Although this week will be a shorter for gold futures given a U.S. holiday, gold looks likely to end the week in a bullish position near the highs of the week. If that occurs it would provide another sign of strength, with the high for the week being the near-term important resistance level to watch.
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