Gold has broken above its recent uptrend channel and has met an upside objective of $1139 from the bullish reverse head and shoulders centred on the low of 28th June.
It was then standing at important resistance that has capped the price since mid-April.
1. Bullish case:
How about gold takes a breather here and forms a bullish pennant between the falling resistance line and the rising uptrend line?
2. Bearish case:
Maybe the price will be capped at the resistance line as it has been twice beroe and the relief rally is over. Look out for a move down.
3. Ultra-bullish goldbug case: Gold will rocket through the resistance line and it's a new bull market.
I looked at option (1) as the most likely, followed by option (2).
If a pennant were to formas in the chart above, the downside would be $1318. That would be a tight pennent but of course, the price could fall back into the little uptrend channel and form a larger pennant.
HA! Gold has taken a bit of a dive thie morning to $1310 (so far). So the above pennant is blown out of the water. However, the centre line of my uptrend is at about $1286 right now so a fall to $1286 wouldn't be a disaster. To hit the bottom of the uptrend channel would take gold to $1240 or $1250. Any pennat forming then might be a bearish pennant! So we are not out of the woods yet.
Let's see if $1300 holds first, then $1286 before getting too excited.
Let's have a look at perspective.
Bullish price needed to get out of April crash more is $1350-1360: that could be the target of a bullish pennant if it occurs:
Bearish targets if this thing breaks down as it has done twice before:
$1200 and $1100: