Gold (XAUUSD) Price Forecast: Consolidates Above Breakout Line, Upside Still in Play

Gold reached a new near-term trend high of $3,403 on Thursday before sellers took control. Subsequently, it dropped below Wednesday’s low of $3,344 to a low for the day of $3,339. This generates an outside day showing short-term uncertainty. However, support around a top declining trendline (purple) for the recent bearish correction was retained and the larger developing bullish pattern continues to dominate.

If gold continues to stay above that trendline, the bullish outlook is retained. After Friday, a short rising internal trendline (blue) connecting the recent interim swing low (C) will gain significance. It also represents potential support but will rise above the falling purple trendline next Monday.

Bearish Daily Behavior

At the time of this writing, gold is likely to end the day in a relatively bearish position, negative for the day and in the lower half the day’s trading range. This could indicate that more consolidation may occur before a successful bullish continuation of the trend occurs. That is fine and could be healthy as it allows more time for underlying demand to grow.

A continuation of rising ABCD pattern was triggered this week on a rally above a prior interim swing high at $3,366, and a trendline marking dynamic resistance for the recent bearish correction. That is long-term bullish behavior, but it will depend on the follow-through.

Upside Breakout Dominates

Since the bullish breakout on Monday, gold has consolidated above the declining purple support line in a relatively tight range. This shows demand being retained overall. Support for the three-day range is at Tuesday’s low of $3,333 and a new resistance level was established with today’s high of $3,339. However, given the outside day from today, this pattern could continue to expand with either false upside or downside moves. However, since Monday’s upside breakout was confirmed with a daily close above the $3,366 swing high, an eventual upside continuation remains most likely.

Bullish Continuation Above $3,339

A decisive upside breakout above today’s high leads to another interim swing low at $3,439. That is followed by the record high of $3,500 from April. That high price area represents an initial upside target zone for gold since a rising ABCD pattern completes nearby at $3,491.

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