Gold: New Highs and Future Projections
NEW YORK (August 16) Gold broke out to a new record high on Friday following a failed attempt on Wednesday. Momentum was strong and remains so as trading continues near the highs of the day at the time of this writing. It has traded as high as 2,506 and will likely close strong for the week thereby confirming a continuation of the long-term bull trend. Given that this is the first day of the breakout a continuation next week seems likely.
Breakout of Symmetrical Triangle
Today’s advance triggered a breakout from a symmetrical triangle consolidation pattern that has been forming for about a month. A strong burst of upside momentum was seen on the move out of the triangle, and it is what should support improving demand from market participants over the weekend.
Follow-through will be key from here. Does gold pullback first before rising above this week’s high and staying there? Or is a pullback to test the breakout zone as support to happen first.
Triangle Targets 2,605
As for targets, the measuring objective from the triangle pattern is estimated to be 2,605. That’s derived by taking the distance in price from the low to high of the pattern and then projecting it up from the breakout price level (red arrows). However, on the way there the next target is identified around 2,543. That’s where a rising ABCD pattern completes an initial target. The secondary target is a 127.2% extension at 2,595. Notice that it is close to the triangle target and therefore the two price levels can be watched as a price range.
Long-Term Analysis Points to 2,566
In between those two target areas is a long-term target at 2,566. It comes from a large rising ABCD pattern that starts from the lows in September 2022. The CD leg of the pattern begins from the lows in October 2023 and the target is a 161.8% extension of the AB leg of the pattern. The most recent long-term target was hit around the prior record high in July. Just a reminder that these levels deserve to be attended to. Also, they fail and that is also telling about the dynamics of the market at the time. Of course, there are also higher potential targets in gold but first the initial targets need to be reached.
FXEmpire
