Gold continued its advance today, rising above yesterday’s high and completing a second sequential day of a higher daily high and higher daily low. This follows a short two-day decline off the recent 1,997 trend high that found support and triggered a bullish reversal from support of the 23.6% Fibonacci retracement. This is a relatively shallow retracement that speaks to the aggressive of buyers even after a 10.3% advance in only 10 days as of the October 23 trend high.
Gold May Not Wait for New Investors to Join
Given the price action of the past couple days, it doesn’t look like gold is going to give buyers a chance to jump on board from a deeper retracement. They will need to either enter aggressively or risk missing a continuation of the rally starting from the October swing low of 1,810. This should help facilitate a continuation higher.
Gold on Track to Close at New High for Rally
Note that today’s high of 1,993 was only a little shy of the 1,997-trend high. Yesterday, gold had a chance to close at a new daily closing high for the uptrend, but it couldn’t hold on to the advance. Instead, today gold is on track to close above the October 20 closing price of 1,981 thereby providing a new sign of strength for the trend. However, if it does not, today’s advance is not closing as strong as it might.
Watching for Breakout Above Today’s High of 1,993
A bullish trend continuation will be signaled on a rally above today’s high. Other nearby potential resistance areas include the completion of a measured move at 2,000, followed by the 78.6% Fibonacci retracement of the full downtrend at 2,024. That Fibonacci target begins a potential resistance zone that goes up to around 2,036.
Heading Towards New Highs
The bigger picture in gold has its sights on eventual new record highs. At the start of the recent correction gold made a new high of 2,082. That day ended bearishly, with an inverse hammer candlestick pattern. It triggered down the next day leading to a 13.0% correction that ended on October 6. The current advance followed and is set up to test the record high and rally above it. Simple extensions of retracements point to initial new high targets of 2,097 and 2,156.
Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.