Gold Breaking Out?
Gold extends rally forms new break out.
Overnight traders finally cleared gold’s triangle consolidation pattern that has held price since April. It’s been a solid week so far for the yellow metal with buyers adding 1.90% to this point. A weaker USD and US-China tensions have been feeding demand.
Technically, price remained in a weekly and monthly uptrend but, since April its formed a consolidation triangle in the daily uptrend. It’s not uncommon to see this as price bounces between two points, gathering momentum while both sides weigh up current influences.
Yesterday’s session produced two technically significant signs in the short term. Firstly, price broke above $1,716.05 resistance and second, price broke out of the triangle pattern. We’ve added two daily charts below showing two views of price at the moment.
Chart one is zoomed in and we’re looking at the break above resistance and out of the pattern. We’re watching two more levels that could create resistance, these are the minor resistance and the April high. If we do see a new correction we want to see buyers find new support above the breakout point creating a higher low.
Chart two is more of an overall picture showing the longer-term trend. We have measured the pattern base which on measured move rules gives us a rough idea of where the break out could go if it confirms and completes the leg up. This distance is around 5%. For now, we are looking to see how far gold runs now from the initial break, and if the next pullback respects the break out point from the triangle consolidation pattern.