Potential for an inside day bullish breakout
The inside day sets up a potential upward breakout on the upside above today’s high. Thursday’s high was around 2,425, which is the next important level as a break above this would trigger a continuation of the uptrend. The hammer characteristic of the inside day indicates continued bullish demand. Additionally, today’s price action is primarily at the upper end of yesterday’s trading range, which indicates strength compared to Thursday’s price range. Additionally, Thursday’s close of 2,415 was gold’s third-highest price ever, which is also a sign of strength.
Above 2,425 is a signal for trend continuation
A sustained breakout above this week’s high of 2,425 would be the catalyst for the continuation of the bullish trend. Gold would then need to surpass the April 12 high of 2,431. After that, gold could head towards its all-time high of 2,450. Given the diversity of recent bullish indications, a breakout above 2,431 is likely.
Final new high targets are 2,462 and 2,480
The first two new high objectives are 2,462 and 2,480. The long-term 161.8% retracement objective from the drop from the August 2011 high identifies the first price level. This price level is followed by the completion of a long-term ascending ABCD pattern at 2,480. These price levels are followed by a Fibonacci confluence zone near 2,489, which is where two or more Fibonacci levels come together.
Regardless of the bullish scenario above, sometimes markets don’t go so easily. If that happens with gold, resistance could lead to a retracement before a breakout to new record highs. This is an alternative scenario to watch out for in case it occurs.
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