Gold’s Rally Continues: Key Levels to Watch for Upside Potential
Gold Forecast Video for 02.06.23 by Bruce Powers
Gold rises further to reach its first potential resistance zone. Nevertheless, it remains strong and in the top half of the day’s (Thursday) range. If it closes there, it may see more upside before a retracement. The high price for the day was 1,983. It busted above the 34-Day EMA at 1,978 earlier and is sitting just below it at the time of this writing.
Weekly High and Fibonacci Retracement Levels Pose as Potential Resistance Areas
Just above today’s high is a weekly high at 1,985, which is followed by the 38.2% Fibonacci retracement at 1,989. Either price area could see resistance. However, if gold can close above the weekly high on a daily basis the chance for higher prices increases. At that point it will be clearly back above the 34-Day EMA, which is bullish. Higher targets would then start with the 38.2% level, followed by the 50% retracement at 2,007, and the 61.8% Fibonacci zone around 2,025.
Developing ABCD Pattern Targets Higher Prices
There is also a developing ABCD pattern on the 4-Hour chart (not shown) that points to higher prices. The CD leg has started, and it will match the AB leg at 1,996. If reached, gold would have already surpassed the weekly high and 38.2% retracement.
Rallies off Strong Support
Gold was clearly rejected off support at the uptrend line this week, leading to a rally. Future retracements should also hold above support of the uptrend line to maintain a bullish intermediate term outlook on gold. The significance of the support area around the trendline was supported by confluence with the 100-Day EMA (purple), and the 50% retracement area. You can see on the chart how the low of the retracement was almost a perfect bounce off the 100-Day line.
Signs that Correction is Complete
Given that the recent corrective low was confirmed by more than one indicator, it has a good chance being the low of the correction. Next, we want to see a daily close above last week’s high of 1,985 to confirm strength. If the corrective low is in, then gold is eventually heading towards the trendline at the top of the rising channel. Retracements can be watched for bullish setups to take advantage of the larger bullish trend.
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