Another day, another gap. Will we see further improvement?
In today’s gold price forecast I decided to share my yesterday’s Quick Gold Alert with you. Have a nice read!
Technical Picture of Gold
The overall situation in the medium term hasn’t changed much after yesterday’s session, and Monday’s comments on this topic remain up to date also today. Therefore, in today’s Quick Gold Alert we will focus only on the very short-term changes and their potential implications for broader perspective.
Let’s take a closer look at the daily charts.
In Tuesday’s Quick Gold Alert, you could read the following:
(…) gold futures started the day with another (third in a row!) gap ($2,425.50-$2,428.85), which resulted in further improvement and an increase above yesterday’s opening price (which is also the upper border of yesterday’s significant gap).
Taking all the above into account and combining it with Monday’s buy signal generated by the Stochastic Oscillator, it seems that we’ll see further improvement and a re-test of yesterday’s peak and the above-mentioned nearest resistance zone in the very near future.
Looking at the above chart, we see that the situation developed in tune with yesterday’s bullish scenario, and the buyers reached the mentioned target.
Thanks to yesterday’s increase, gold not only closed the day above Monday’s peak but also above the Apr. and May highs, which, in combination with the morning gap and an increased volume that accompanied the move (it confirms gold bulls’ involvement and appetite for higher prices) suggests that another attempt to move higher is very likely.
What impact did this price action have on today’s trading?
Before we know the answer to this question let’s recall the quotes from Monday’s alert:
(…) How high could the gold futures go?
Taking into account the breakout above the red declining channel, it seems that we could see an increase to around $2,468, where the size of the upward move would correspond to the height of the formation (marked with the orange rectangles).
However, before we see an implementation of this optimistic scenario, gold bulls will have to break above the mentioned nearest solid resistance zone. (…)
As you see on the above chart, after yesterday’s successful invalidation of a small breakdown under the upper border of the gap formed on Monday and a daily closure above the previous intraday high gold futures opened Wednesday with another green gap ($2,451.90-$2,455.60).
This fourth in a row gap (!) resulted in an opening above the 78.6%Fibonacci retracement and quickly translated into an attack on the key resistance zone (about which you could read more in Monday’s Quick Gold Alert).
Thanks to the buyers’ involvement gold futures came back above the previously broken lower border of the green rising channel and climbed above the red gap from Jul. 19, which paved the way for the implementation of the above-quoted pro-bull scenario from Monday.
What were the consequences of this climb?
Gold futures hit an intraday high of $2,470.15, achieving the minimum range of movement based on the breakout above the red declining channel.
Will we see further improvement?
Today’s price action before the U.S. market open looks encouraging (especially when we factor in the fourth in a row pro-growth gap, the buy signal generated by the Stochastic Oscillator [which continues to support the bulls] and the breakout above the key resistance zone) and suggests that higher prices may be just around the corner.
How high could the bulls go?
If gold futures extend gains from here, the first upside target will be the upper border of the black rising channel seen more clearly on the first chart (currently at around $2,480). If it is broken, we’ll likely see a test of the Jul. 17 peak of $2,488.40.
What could happen if the buyers break above it?
We’ll likely see an attack on the next psychological barrier of $2,500 in the following days.
However, in my opinion, such price action will be even more likely and reliable if the bulls manage to close today’s session above the mentioned key resistance zone.
Summing up, gold futures created the fourth in a row pro-growth gap and came back above the previously broken lower border of the green rising channel, also climbing above the key resistance zone, which was the last technical barrier before the upper line of the mentioned black channel and the Jul. all-time high. Therefore, if the bulls manage to hold gained levels (and close today’s session above the mentioned key resistance zone), we’ll likely see an attack on Jul. peak in the coming day(s).
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See you tomorrow.
Anna Radomska