In today’s gold price forecast, I decided to share with you my insights from yesterday’s Quick Gold Alert. Have a nice read!
Another day, another peak, but what’s next?
Technical Picture of Gold
Let’s start today’s Quick Gold Alert with the quotes from yesterday’s edition:
The first thing that catches the eye on the daily chart is Friday’s breakout and daily closure not only above the mid-Sept. peak, but also above the upper border of the orange rising trend channel and the upper line of the purple rising wedge, which together served as the major technical resistances from the beginning of the month.
What does it mean for gold bulls?
That that their crossing opened the way to the north.
So, how high can gold futures go?
Looking at the daily chart, we see that the first upside target based on the range (marked with blue rectangles) of the black channel was reached earlier today (at around $2,663) (…)
However, considering Friday’s breakouts, it seems that as long as the price remains above both mentioned lines and the mid-Sept. peak another attempt to move higher is likely.
Therefore, if the bulls do not give up and push the futures higher, we can see an increase to around $2,675.
(…) in this area, the size of the upward move will reach the minimum range of movement resulting from the flag formation.
What do I mean by that?
(…) the range of the second purple rectangle is around $2,675, which suggests that attack on this area should not surprise us in the very near future.
(…) in this area they have (at the moment of writing these words) (…) the red resistance line based on the Aug.2 and Aug.20 peaks, which is the last stop before the upper border of the green rising trend channel (currently at around $2,692) and the barrier of $2,700.
Looking at the above chart, we see that the situation developed in tune with yesterday’s assumptions and gold futures extended gains after Tuesday’s alert was posted.
Thanks to this increase, buyers not only realized the scenario resulting from the previously described flag formation, but also managed to break above the mentioned red resistance line (based on the Aug.2 and Aug.20 peaks) and closed the day above it, which opened the way to the next resistances.
Thanks to this improvement, gold bulls attacked once again during Asian trading hours, which translated into a test of the above-mentioned upper border of the green rising trend channel and the formation of a new all-time peak of $2,694.75.
What can we expect next?
Considering the proximity to the psychologically important barrier of $2,700 and an increase above $2,686 (where the size of the upward move completed the ABCD formation [marked with two orange rectangles on the 4-hour chart]) it seems that some gold bulls may want to take profits off the table here, which in turn can attract bears to the trading floor, who will want to gain something for themselves on this move.
Nevertheless, in my opinion, such price action will be more likely and reliable only if the bears manage to push the price under the red resistance line (based on the Aug.2 and Aug.20 peaks) and invalidate the earlier breakout above this important support/resistance line.
What could happen if it withstands the selling pressure?
In my opinion, such show of the bulls’ strength will likely translate into a re-test of the upper border of the green rising trend channel [marked on the 4-hour chart], which is currently at around $2,697 (yup, a potential fresh peak may be just around the corner). If it is broken, the next stop will be the barrier of $2,700.
But what could happen if the bulls fail and gold futures droop under the mentioned red resistance line?
I believe that the best answer to this question will be the chart below.
In this case, we’ll likely see further deterioration and a test of the first support area based on the 23.6% Fibonacci retracement (based on the entire Sept.6 – Sept.25 upward move) and yesterday’s intraday lows (around $2,647.30-$2,651.30).
If this area is broken, we’ll likely see a test of the next support zone created by the previously broken Sept.18 peak of $2,627.10 and the 38.2% Fibonacci retracement (both zones are marked with the red ellipses on the above chart).
Connecting the dots, the moment of truth is approaching fast, and the direction of the next bigger move will be probably clearer after today’s session.
Summing up, gold bulls pushed the futures higher before today’s U.S. market open, which resulted in another fresh all-time high of $2,694.75. Although the sellers corrected slightly the earlier increase, I believe that as long as there is no invalidation of the earlier breakout above the red resistance line (based on the Aug.2 and Aug.20 peaks) another move to the upside and attack on the next resistances is likely.
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Anna Radomska