Gold Bulls Continue To Shine

In mid-April, we highlighted a potential bullish reversal in gold that suggested the yellow metal was likely to appreciate near-term.

• The key reversal signal was marked by a double bottom formation that started Mar 8 and was confirmed Apr 8 and 15. The double bottom suggested market sentiment was moving away from the bearish mood that has seen price drop from $1959.4 to $1676.9 between Jan 6 and Mar 8.
• The significance of the pattern was reinforced by the fact that the base coincided with the low end of a bear channel drawn off the Aug 7 2020 high.
• Subsequent price action saw price climb, eventually achieving the double bottom objective of $1834.1 on May 7.
• Gold has continued to appreciate and most recently, an important retracement has been cleared at $1851.5. This is 61.8% value of the Jan 6 - Mar 8 bear leg.
• Furthermore, yesterday saw Gold clear the top of the bear channel from the Aug 7 2020 high, following the move above $1858.4.
• These recent technical breaks strengthen the bullish case in Gold. An extension higher would open $1892.7 next, the 76.4% retracement of the Jan 6 - Mar 8 phase. Further out, gains above $1900.00 would suggest potential for an extension towards $1959.4, the Jan 6 high. This would mark a full retracement of the last bear cycle.
• The trend is overbought however until a reversal signal in price is confirmed, it is a condition that will be monitored and currently does not appear to be a threat to bulls.
• Key near-term trend support has been defined at $1808.9, May 13 low.