Another green gap, completed scenario and their implications.
In today’s gold price forecast, I decided to share with you my insights from today’s Quick Gold Alert. Have a nice read!
Technical Picture of Gold
Let’s start today’s analysis by quoting the last Quick Gold Alert:
(…) today’s higher open (…) formed a green supportive gap ($2,672.40-$2,679.60), which serves as the nearest support at the moment of writing these words.
Thanks to this positive development gold futures finally moved above the key resistance zone (created by the upper border of the red gap ($2,668-$2,675.80) from Dec.16, 2024 and the 50% Fibonacci retracement), which suggests that further improvement is just around the corner.
Thanks to this price action, the futures also broke above the upper line of the orange consolidation (marked on the 4-hour chart below), which suggests that we’ll likely see a realization of yesterday’s pro-growth scenario.
(…) So, what is the potential scenario based on this formation?
If the futures successfully climb above the upper border of the orange consolidation ($2,678.31), we’ll likely see a breakout above Friday’s peak, which would be a bullish sign that should trigger further improvement and an increase to around $2,703.60, where the size of the upswing would correspond to the height of the formation (the upper orange rectangle).
If the bulls show such strength it will likely also translate into a realization of the Thursday’s potential bullish scenario.
As a reminder:
(…) If the bulls manage to close today’s session above the upper line of the consolidation, we could see an increase to around $2,707 where the size of the upward move would correspond to the height of the formation. At this point it is worth noting that in this area gold bears have an important ally – the red gap ($2,704.90-$2,709.40) from Dec.13, 2024, which serves as a quite solid resistance.
From today’s point of view, we see that the situation developed in line with the above assumptions and gold futures hit an intraday high of $,2,708.91 (European trading hours), realizing both pro-growth scenarios from previous days.
As you see on the daily chart gold bulls managed to finish yesterday’s session above the mid-Dec. gap and the 50% Fibonacci retracement, which confirmed their strength and appetite for higher prices.
This positive development translated into a higher open, creating another green pro-growth gap ($2,690.80-$2,693), which lured even more bulls to the trading floor and resulted in a breakout above the 61.8% Fibonacci retracement and the previously broken barrier of $2,700.
Thanks to this price buyers extended gains and attacked the above-mentioned red gap ($2,704.90-$2,709.40) from Dec.13, 2024, which continues to serve as the nearest resistance.
At the same time the futures broke above the upper line of the violet rising channel (marked on the 4-hour chart), which suggests that we could see an attack on the resistance area based on the Dec.13 intraday highs (marked with two horizontal red lines on the 4-hour chart).
What’s next?
Taking into account the importance of the above-mentioned resistances, it seems that the outcome of the battle fought here will decide where the futures head next.
What do I mean by that?
If the buyers’ close ranks and manage to break above the mentioned resistances, the way to around $2,725 will likely be open.
Why there?
Because in this area three important factors come together:
- Firstly, the next (78.6%) Fibonacci retracement.
- Secondly, the upper line of the very short-term pink rising trend channel.
- Thirdly, in this area the size of the upward move will correspond to the height of the green rising channel (both rectangles are marked with green on the 4-hour chart).
Additionally, there are no sell signals generated by the indicators, which increases the probability of further improvement in the following hours.
However, in order to have an insight into all possible options at these levels, let's check what can happen if the bulls fail and show weakness.
Well, in this case, if the buyers let their opponents invalidate the earlier breakout above the violet channel, we’ll likely see a test of the barrier of $,2700. If it fails to stop the bears, the next target will be the lower line of the pink channel (currently at around $2,694.30) or even today’s opening green gap ($2,690.80-$2,693).
Therefore, in my opinion, keeping an eye on the nearest resistances and bulls’ behavior there could give us valuable clues about the direction of the next move. Another factor worth monitoring today are the 4-hour indicators. Why? Because if they generate sell signals and the bulls show any sign of weakness, gold bears can use these opportunities to win something for themselves.
Summing up, thanks to another higher open and the second in a row green supportive gap gold futures climbed above the barrier of $2,700, completed both pro-growth scenarios from previous days and attacked the next resistance zone. The current position of the indicators (both, daily and 4-hours) continues to support the bulls, suggesting that another attempts to move higher and realization of the next pro-growth scenario may be just around the corner – especially if the bulls close the nearest red gap.
Have a profitable day, a wonderful weekend and see you on Monday.
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Anna Radomska