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Gold: Keep an Eye on This Wedge Pattern

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On Sunday I mentioned the consolidation on gold may have come to an end last week.

Friday’s rally suggested that buyers were ready for the next leg higher.

I also wrote that a daily close above 1320 would secure the breakout and expose the next key resistance near 1350/60.

Some of you were a bit confused about how to play this one. But breakouts like this are incredibly straightforward.

I think the issue is that many traders tend to overthink things.

Monday’s 1326 close on gold confirmed the bullish breakout. And as you can see from the chart below, Tuesday’s session retested 1320 as new support.

It didn’t take long for gold bulls to get behind this breakout.

As I write this, the market is trading at 1343 and looks poised to attack the next key resistance area between 1350 and 1360.

But although I still think a test of the 1350/60 area is in the cards, there is a pattern developing that is a little worrisome for buyers.

The year-to-date wedge seen below suggests we’re nearing a top, at least in the short term.

That isn’t surprising given the multi-year range ceiling located just above 1360.

But this wedge has been in place for less than two months. That means it isn’t as convincing as it may appear at first glance.

Still, I think it’s worth keeping an eye on, especially as today is testing wedge resistance near 1345.

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Gold remains a buy while above 1320. Resistance comes in at 1345 (wedge top) followed by the area between 1350 and 1360.

It’s going to take a daily close below wedge support near 1320 to turn this market lower.

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Gold uptrend with rising wedge pattern

Leave a Comment:

28 comments
nadzuah says

nice one justin

Reply
    Justin Bennett says

    Cheers. Thanks for commenting.

    Reply
Adebayo saheed says

Waoooo….your are blessed to this generation…. 1345 resistance…. The price has to react in that area….which mean a daily close above 1345 confirm it will go up…but for now….I think its time for pull back….my opinion Sir

Thanks

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    Justin Bennett says

    It could be, but it’s still a buy in my opinion.

    Reply
Muturi says

Am a new trader and for sure i have learnt a lot from you sir

Reply
    Justin Bennett says

    Glad to hear that Muturi. Cheers.

    Reply
Uzoma Nnamdi says

great sir. thanks for the update

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Lekhema says

I have been bullish since 1302.00 I like these words “OVERTHINK” I am ready to face the real world because of you, and this make sense even when compared to DXY my target is somewhere 95.00 level. Thanx man.

Reply
    Justin Bennett says

    You’re welcome. I appreciate the kind words. Thanks for the support.

    Reply
Patrick Odhiambo says

Thank you for this timely piece

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Qvee says

You are amazing. Thanks for the daily lessons.

Reply
    Justin Bennett says

    Cheers. You’re welcome.

    Reply
Dominique says

Thanks

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kiltedfxtrader says

Thanks coach…..some good advice and yes I have that wedge line drawn also confirming I’m learning 🙂 I also have the resistance at the 1363 mark…..just doing the analysis after waking up to see that resistance line has been hit so took profit. I will wait for a pullback then see price action before taking another long with profit target just below the 1363 mark… With that said based on the current run, weak dollar and scare mongering over in the US stocks I would NOT be surprised if we see further bullish movement right up to resistance with no looking back….

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    Justin Bennett says

    My pleasure. Thanks for sharing.

    Reply
Nero says

Thanks

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fhratul says

Great art Mr. Justin Bennett

Reply
    Justin Bennett says

    Cheers. Glad you found it helpful.

    Reply
Fredrick says

Mmmmm……..nice one. The Eagles eye!!!! Regards.

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Hamilton says

Thanks Justin, always on point.

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    Justin Bennett says

    You’re welcome, Hamilton.

    Reply
joel says

Terrific commentary

Reply
    Justin Bennett says

    Thanks, Joel. It’s working out nicely so far.

    Reply
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