Gold Bounces off Initial Retracement to Trigger Bullish Trend Continuation

Following a brief three-day decline, gold initiates a positive recovery off support. Before gold ended the day in the green and up, buyers entered the market at the bottom of yesterday, 1,934. A 38.2% Fibonacci retracement that was finished during the decline showed that gold was in a position where positive mood should naturally resume. Then, today, gold challenges the most recent swing high of 2,010 by breaking out above yesterday's high of 1,979. Gold is indicating that it wants to move higher given this market action and the trend structure.

Complete Fibonacci Retracement at 38.2%

It is encouraging to see investors enter the market at the 38.2% retracement level rather than a lower Fibonacci retracement level. The strength is then confirmed by a fresh positive turnaround indication, which also raises the likelihood of the trend continuing in this instance. The next optimistic indication is a clear rise above this week's peak of 2,010.

Resistance Found at Recent High May Reappear

Resistance was also present at the most recent peak and could return. The peak struck a top trendline that crossed the highs of recent price action, including this week's high, and was just below the 88.6% Fibonacci retracement. You can see how the upper trend line could continue to act as support as the market moves higher.

Measured Action Offers More Proof of Resistance

The conclusion of a measured move in which the current advance equals the first rapid advance at the start of the downtrend is another sign that there may be opposition nearby the most recent high. The first phase of the rally, which started off the November low (1), progressed by 10.5% in just eight days. Starting from the bottom on March 8, the current step up finished an 11.0% gain in the same amount of time. This illustrates the uniformity of price structure changes.

New High for Gold Targets Breakout Previous Historical Records

Gold next moves towards a number of unconfirmed Fibonacci levels (88.6% is at 2,018) and previous swing highs (solid purple horizontals), the first of which is from August 2020 at 2,031, followed by the historical high of 2,070 from March 2022. This scenario assumes that gold rallies decisively above the recent high as well as of the top trend line.