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XAUUSD: Gold Breakaway Gap Puts an End to the Consolidation

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I’ve discussed the gold (XAUUSD) bullish scenario for months.

I first wrote about it on this blog on October 19th.

And since September, I’ve said that XAUUSD may need to revisit the $1,790 area before moving higher.

It’s a level that was critical for gold between 2011 and 2012.

If you saw my November 28th forex forecast, you know about the support area between $1,700 and $1,790.

Those were the locations of two descending channels we had on our radar.

XAUUSD caught a bid at the higher level and bounced from $1,760 on November 30th and never looked back.

As you can tell, today’s breakout above $1,900 has been in the works for a long time.

Now, you may be wondering about today’s gap up.

I often talk about the need for gaps to close before a market can move higher or lower.

However, no two gaps are the same.

In the case of XAUUSD, Monday’s gap is what’s called a breakaway gap.

It’s a gap that occurs as a market breaks free from a range or congestion area.

That certainly applies to gold, given that this gap up occurred following five months of consolidation.

The gap higher is also with the trend.

That’s a significant factor when trading any breakaway gap.

As for entries, the best ones were below $1,900.

We knew about the $1,760 support area, as well as $1,850, which flipped to support a few weeks ago.

That said, XAUUSD probably needs to clear the $1,930 area on a daily and weekly closing basis to re-expose $2,000.

Notice how $1,930 has been key since last August.

But everything below $2,075 is just the warm-up, in my opinion.

The real story here is how a close above $1,900 would confirm the bull flag pattern and open the door to the objective at $2,380.

I first mentioned that target on December 7th.

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XAUUSD bull flag on the daily chart
XAUUSD daily time frame

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18 comments
Justin Bennett says

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MARTIN MAINA says

HELLO SIR IF I MAY ASK ARE WE LIKELY TO FILL THAT GAP OR?, I AM SKEPTICAL ON CHASING THE YELLOW METAL AS I HAVE NOOPEN POSITION?

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    Justin Bennett says

    If it’s a breakaway gap, it won’t fill.

    Reply
      Thayyib says

      ok.. thanks

      Reply
Deepak says

Thank you Justin

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Henry says

Wonderful, always great having your insight.

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    Justin Bennett says

    Cheers, Henry.

    Reply
THAYYIB says

I THINK GOLD WILL FILL THE GAP… Am i rate?

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ZULFIKAR ALI says

Your analysis is always on the spot….you are a true forex gem.

Thanks a lot!
best regards

Reply
    Justin Bennett says

    Thank you. Happy to help. 🙂

    Reply
Colin de Ste Croix says

I went long gold and silver at the start of trading!! Now I wait (-:

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    Kristoff says

    Are you still holding your long position? the gold is now below 1900..

    Reply
ali says

thanks for the update sir.

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Ngo Sy Ha says

thanks you so much

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yousef says

Great as usual

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Kristoff says

is the bull flag pattern confirmed? it just broke the 1900 support and seem to be downtrend now…

Reply
Sana says

Gold buy or sell??

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