Bullish Channel Breakout Confirmed
An initial channel breakout was activated yesterday and the day closed above the channel line. As shown on the chart with red and green arrows, the upper channel line area has been hit as support or resistance more than seven times, including most recently at last week’s high. Moreover, the current low of 2,771 shows a successful test of support on the line and the price was rejected to the upside.
Potential resistance is at 2,797 to 2,815
The current bullish price rally puts gold in a good position to challenge the next potential resistance zone. It looks like it will start at 2,797, which is the 200% extended retracement of the significant decline that started from the 2011 peak. Whether that relationship leads to resistance remains to be seen.
An initial target derived from measuring the recent bull flag points to the top of the range at 2,815. Along with a few other price levels in between, a range of around 2,797 to 2,815 is identified as a possible price zone where supply could increase and slow the increase or lead to a retracement.
Possible time symmetry approaches
Regarding the recent bull flag pattern, since the first advance after the September 4 swing low ended after three weeks higher on the weekly chart (not shown), the current second advance of the flag could do the same. After three weeks there is potential for time symmetry as the two rallies will be equal after three weeks.
If this were to happen, it would support the ability to achieve the following identified objectives this week. Furthermore, if the pattern continues, this week’s high could be followed by a pullback or consolidation phase. If this is the case, progress will be extended based on time.
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