The week ahead may prove to be an important one for developments in the gold market, as key technical levels come into play on the longer term charts. Last week's test of major trend line support showed up on the Autochartist hourly time frame as a confirmation of an Ascending Triangle chat pattern. This established a positive bias going forward, but the bounce has so far been muted and the bottom of this pattern will need to hold to maintain the bullish outlook.
With the sell-off from resistance at the $1,735 per ounce level, the market confirmed the upper trend line of the pattern and encouraged range-bound trading for the time being. Support at $1,720 found buying interest in line with the rally from the major bottom near set nearly two months ago. As this move higher is now near the mid-range between the all-time highs above $1,900 per ounce and the correction to below $1,550 per ounce, the Ascending Triangle becomes particularly significant in identifying the strength of the bull market. Expectations are for a continuation of the bounce to a retest of the $1,735 level, as identified here by Autochartist. This would fill in more of the pattern and confirm the current trading range by leaving the trend line support intact. A move above the resistance is needed to trigger an upside breakout, which would set the price on target for an eventual retest of the al-time highs. Failure for this leg higher to materialize early on would put pressure on the uptrend, with only minor weakness needed to send the price under last week's swing low and break the triangle on the downside. Thus, the overall range between support and resistance of about $15 per ounce may yield a long term direction once the breakout occurs to one side or the other. Positioning with an upside bias and maintaining a tight stop-loss may allow for a low-risk entry ahead at the current price. For further information on this and other Autochartist products, visit our website at www.autochartist.com
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