Weekly Chart Shows Strength
The longer time frame weekly chart (not shown) shows greater strength than what can be seen in the daily chart. A breakdown from an inside week pattern earlier this week subsequently reversed to the upside and rose above last week’s high of 2,639. A new sign of strength will be indicated if gold can close this week above that high.
Regardless, this week’s price action shows the sellers in control earlier in the week and flip to buyers being in control. In other words, a failed weekly breakdown occurred. A failed breakdown has the potential to lead to accelerated moves in the opposite direction of the initial trigger. That would be up for gold. Regardless, a signal is needed for signs of additional strengthening.
Rally Above 2,665 is Bullish
This week’s high, and a short-term uptrend high was 2,665. A rally above it will trigger both a trend continuation and a breakout above a weekly candle. Notice that today’s high slightly exceeded the weekly high from two weeks at 2,664. That was another sign of strength. Regardless, a decisive rise above 2,665 triggers a three-week breakout and will put gold in a good position to potential eventually test resistance around the December monthly high of 2,726.
Drop Below 2,625 Might Lead to Lower Prices
On the downside, Thursday’s support at the day’s low of 2,625 coincides with two recent daily highs and the top of an internal downtrend line (dots). Subsequently, the small uptrend line connecting the recent swing low at 2,582 marks potential support, as well as the recent interim swing low at 2,596. A decisive decline below 2,596 is a danger sign for the bulls as it shows the short-term uptrend faltering.
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