Bullish price action
Today’s price action puts gold in a good position to break the recent all-time high of 2,686. The price broke out of the flag pattern yesterday but closed weak, lower for the day and in the lower half of the day’s trading range. And below the trend line. However, a recovery today confirms the first breakout signal. Including the successful support test during the 20-day MA.
The 20-day line has done a good job of identifying trend support since it was regained with a wide-range green candle on August 8, and therefore should do so again. It almost failed to act as support last week as Wednesday ended below the 20-day line.
Subsequent price action will be critical in providing clues to the strength of demand and therefore the likely outcome of the breakout. Calculating a measurement target based on the flag pattern indicates a potential initial target around 2,815. Whether or not it is ultimately achieved, it points to likely further upside potential for gold if the bull flag breakout continues.
The stage is set for new all-time highs
The current trend high of 2,686 is not far away and could be broken to the upside soon. If the flag outbreak continues, as is usually the case, a new record could be reached within days. A continuation signal triggers above today’s high at 2,669 and further ahead, a rally above a small swing low inside the flag at 2,670. If a new record is reached, gold would head towards a potential resistance zone starting around 2,724. The bull flag breakout is said to be showing signs of failure after falling below last week’s low of 2,628.
For a look at all of today’s economic events, check out our economic calendar.