Gold forecast rally hit a roadblock at $1,953, but a bullish reversal on the weekly chart signals potential upward momentum.
Gold tried to continue its rally earlier today, but it encountered resistance at $1,953 and fell to a three-day low of $1,934. However, it bounced off this level and closed the day weaker than it might have, in the lower half of the day’s range.
Despite this setback, gold confirmed a bullish reversal on its weekly chart this week with a daily close above last week’s high of $1,923. This is only the first week of the reversal, which should eventually lead to a bullish continuation higher.
Gold forecast on Bullish Reversal on Weekly Chart
A bullish trend continuation signal occurs on a move above this week’s high of $1,953. If gold continues to strengthen from there, it should reach the 78.6% Fibonacci retracement around $1,965.
In the short term, we could see further consolidation or a pullback. If this happens, we will be watching the area of the internal uptrend line along with the 34-day exponential moving average (EMA) at $1,927 for signs of support. Of great significance will be possible support above the 200-day EMA, currently at $1,909.
Support Areas to Watch
If a retracement finds support at or above the 34-day EMA, it would be a stronger bullish indication for the price of gold than if it drops below the 34-day EMA. Also, if a bullish reversal occurs a little higher, off support of the internal uptrend line, gold will be showing greater short-term strength than if it dropped to the 34-day EMA.
Gold has been testing resistance of the longer downtrend line for the past several days. It has risen above the line each day yet has subsequently closed at or just below the line. This shows upward pressure remaining and confirms a key pivot zone. A breakout higher could lead to an accelerated move, or resistance around the line first leads to further consolidation or a retracement.
Overall, the outlook for gold forecast is bullish. The weekly chart reversal is a positive sign, and the price is currently trading above key support levels. However, we could see some short-term consolidation before the next leg up.
