Gold’s Expanding Triangle Points to New Highs

Today, we look at a larger pattern that has been developing in gold and may become more important very soon. The weekly chart is used to clarify the situation. You can see that gold has been evolving an expanding triangle consolidation pattern for more than two years. Two trendlines define the borders of the pattern and they are heading away from each other. This is the oppositive of other triangle patterns, such as a symmetrical triangle and ascending triangle, where the two trendlines on the border of the patterns cross each other at the apex of the formation. Nevertheless, each is a consolidation pattern. The expanding triangle can be either a continuation or reversal pattern.

Top of Triangle Provides Possible Initial Target Following New Highs

The top of the expanding triangle should be reached at some point and provides a potential price target on the way up as resistance can be seen around the top of the pattern. When it is reached will determine what price is represented by the top line. Regardless, the intersection of the uptrend line and the rising trendline at the top of the triangle (blue arrow), can be used as a guide. Those two lines cross around 2,111. After that, one of those two lines will be broken. At the same time, a decisive breakout of the pattern and daily close above the top line indicates a bullish breakout and trend continuation.

Can Momentum Be Sustained Following New Highs?

Keep in mind that gold has been rallying since the October 31 low at 1,617. Since then, it has advanced as much as 26.7% in 23 weeks, clearly showing strength. Upward momentum was sustained for much of that move. However, can upward momentum continue to be sustained following a breakthrough at the top of the triangle? That remains to be seen. It may be more likely that a consolidation or correction would occur first, especially since a new record high would have been hit before reaching the top of the triangle. Gold is very close to hitting the prior trend high of 2,070 from March 2022. Therefore, the next key target for gold is that prior high.

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