Gold Price: Record High in Sight as Bullish Momentum is Sustained
NEW YORK (January 23) A rally above $2,772 could confirm gold’s bullish trend, though resistance at this level may cause consolidation before targeting the record high at $2,790.
Larger trends and price patterns impact trends and patterns in shorter time frames. Gold broke out above December’s monthly high on Tuesday with a decisive rally above 2,726. That was an inside month breakout reflecting consolidation on the monthly chart.
The long-term bullish monthly trend continuation signal was then further confirmed on Wednesday with another monthly breakout above November’s high of 2,762. Therefore, the market seems to be signaling the demand is improving to the point that the record high of 2,790 may be challenged in the foreseeable future.
Next Target is 2,772
Nevertheless, gold is getting close to reaching its next identified target at 2,772. That price will complete an initial target for a rising ABCE pattern (purple). Both the AB and CD legs up match the price change at that target. Once there is symmetry in price between the two upswings, there is the possibility resistance. Also, a decisive advance above that target would provide a new sign of strength and increase the chance for a continuation of the immediate rally.
Early Session Selloff Brushed Off
On Thursday gold dipped slightly below Wednesday’s low to hit a low for the day at 2,736. Subsequently, buyers took back control leading to an intraday rally. At the time of this writing, gold is set to close strong, in the upper third of the day’s trading range, and near the opening price. There is the possibility of today’s candlestick pattern completing a bullish doji hammer. That would be a bullish pattern following the failed attempt to go lower earlier in the session. It will leave gold in a solid position to push higher.
Bull Signal Above Today’s High at 2,759
A rally above today’s high of 2,759 will trigger a bullish continuation of the trend that then needs further confirmation of strength on a rally above the current trend high at 2,763. Given the potential resistance around the 2,772 target it could stall there and lead to a pullback or consolidation.
If, on the other hand, buying strength remains strong and the 2,772-price level is exceeded with enthusiasm, the record high at 2,790 is at risk of being broken to the upside. It would be healthier for the trend to have a little pullback or consolidation before there is a breakout above the record high. Otherwise, a breakout to new highs risks losing momentum shortly thereafter.
FXEmpire
