Gold prices have rebounded from a crucial support level, marking a bullish reversal as it continues to trade within a long-term symmetrical triangle formation. This pattern is critical for determining the next potential move in the market.
Gold Finds Support, Signs of Bullish Reversal Emerge
On Wednesday, Gold (XAU/USD) tested support at $3,311, aligning with the lower boundary of a large symmetrical triangle that has formed as part of the ongoing bullish trend. The recent dip to $3,311, which even dropped below Tuesday’s low of $3,315, was quickly reversed, triggering an outside-day bullish reversal. Gold quickly reclaimed Tuesday’s high of $3,345, indicating that short-term control has shifted to the bulls.
However, despite the bullish recovery, the symmetrical triangle continues to limit any significant upside, indicating that the market is awaiting a breakout. If Gold closes above Tuesday’s high, this will confirm the bullish reversal and increase the likelihood of a continuation toward higher levels.
Key Levels to Watch for a Breakout
Wednesday’s rally established a higher swing low, affirming dynamic support at the lower boundary of the triangle. A sustained move above last week’s swing high at $3,375 would signal strength and bring the upper boundary of the triangle into focus. Once the price surpasses the $3,375 mark, the next intermediate resistance lies at $3,409.
For a more significant breakout, Gold needs to decisively surpass the $3,439 resistance level, clearing the top boundary of the triangle. This would confirm a continuation of the broader bullish trend, potentially leading to higher gains. With the triangle’s apex nearing, we are entering a crucial time window for a potential breakout.
Momentum and Volume are Key for Continuation
The consolidation within the triangle has built up considerable price energy. A breakout is expected, but it will require strong momentum and increased volume to validate a bullish continuation. Any sustained upward move should be supported by rising market volume to ensure the price is not driven by temporary factors but by a genuine market shift.
Long-Term Support Remains in Place
It’s essential to note that the recent pullback in Gold found support around the long-term 20-Week moving average, which has acted as a solid support level since late July. This test of the 20-Week moving average reinforces its role in providing dynamic support, suggesting that any further pullbacks could be short-lived.
Given this support, Gold is well-positioned for a potential surge higher, especially if resistance levels are overcome. This behavior adds strength to the current rebound, reinforcing the bullish outlook for Gold as it prepares for its next leg higher.
In summary, Gold’s current pattern points to a bullish outlook, with the $3,439 resistance being a critical level to watch for a breakout. With the 20-Week moving average providing reliable support, Gold could be setting the stage for a move towards higher levels in the coming weeks.
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