We pointed out several times (see this and this) that after the fall at the end of September gold was consolidating in a box. Back then the range was $1582 on the downside and $1680 on the upside.
Then on the 26th October gold broke through that $1680 level and reached as high as $1800. However we are now 3 weeks into that breakout and it appears that the gold price is trying to consolidate in a new box.
Gold in a box redux Gold price consolidating from ‘box’ to ‘box’.
There have been three attempts to push up through $1800 on the top and there have now been 5 attempts to push through $1710 on the downside. The lowest close was $1713 on the last day of October.
Gold is currently trading around $1725 – a close above $1710 is must going into the weekend.
The next couple of trading days going into next week will really be crucial and holding above that $1710 level will be key.
The last ‘box’ lasted 5 weeks before it broke out to the upside. If $1710 on the bottom holds and $1800 on the top then we could see another couple of weeks of this consolidation at higher levels.
A note of caution however, should $1710 fail on a closing basis gold would very quickly retest the once resistance level of $1680 – this level would be a ‘must hold’ level for the bulls because if $1680 would break down then $1600 would be back in a blink of an eye and technicians would be pondering if a bearish head and shoulders pattern was being formed.
The next few trading days will be key.