Strategic Reversal: Gold Rises to Five-Day High, Signals Strength

Gold Forecast Video for 15.01.24 by Bruce Powers

Gold triggers a bullish reversal from key support on Friday as it breaks out to reach a five-day high of 2,062. Resistance was seen at the downtrend line, which was followed by an intraday pullback. The four-day high was at 2,047. If gold can end the week above it, a stronger bullish signal will be indicated than a close below that price level. In addition, such a close would put gold back above its uptrend line and 20-Day MA. A close above shows a complete reversal from the prior four days.

Bounces off Strong Support

Support for the recent retracement was found at a low of 2,013. That low was reached yesterday, and it completed a successful test of support at the 50-Day MA. In addition, a 61.8% Fibonacci retracement was completed during the bearish retracement near the low. Today’s bullish price action points to the likely completion of the correction in preparation for a continuation higher. Given that the lower trend channel line was exceeded only slightly the up trending parallel trend channel remains intact.

Well Structed Rising Trend Channel Points to Higher Prices

The channel is well structured with two matching measured moves seen in the first two legs up. There are similarities between the two moves in both price and time. The first leg up, starting from the October 6 swing low, saw the price of gold advance by 199 points or 11%, while the second leg up ended with a 203 point or 10.5% advance. Both happened in 15 days.

Measured Moves Point to 2,176 Target

Given the symmetry between the two moves a similar move, at a minimum, can be anticipated for the current third leg up. This move is taking longer, so there is not a match in time, but for price a similar target can be anticipated. The approximate target for the third leg up is 2,176. Nevertheless, it remains to be seen how quickly and which route may be taken to get there.

So far, a direct route remains possible. A direct route would keep price action within the boundaries of the rising trend channel and above the 20-Day MA. Notice that the 20-Day line has converged with the lower uptrend line thereby marking a similar price around 2,044. Therefore, gold needs to close above the 20-Day line before it is back within the trend channel. That could happen today or early next week.

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