Grind higher
The path of least resistance for gold continues to be to the upside. On August 16, it triggered a bullish breakout from a symmetrical triangle pattern, has been largely consolidating since then, and is slowly showing signs of strengthening. Also note that the purple 20-day MA has risen and is about to break above the upper triangle line (purple). The orange 50-day MA converged with the internal uptrend line (C) on July 25 and continues to follow it closely. This tells us to pay attention to these moving averages as gold prices rise toward higher levels.
Triangle target points at 2,605
There are several initial upside targets to look out for, but let’s start with the higher initial target marked by the symmetrical triangle pattern’s measuring target. As with most consolidation patterns, we can measure the height of the pattern once it is fully formed and then add that price difference to the breakout level. For gold, this gives us a minimum expected target derived from the pattern of 2,605. In addition, there are two previous target levels to look out for, namely 2,543 and 2,566.
Support above 24.71 must be maintained
No matter how bullish the chart looks for gold, there is always the potential for a pullback before higher prices are targeted. Short-term support is at last week’s low of 24.71. This is also a small pullback that is part of the rising short-term trend of higher swing lows and higher swing highs that begins at the July swing low.
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