Consolidation Continues Above 50-Day MA
On Thursday, gold again consolidated within a relatively tight range around support of the 50-Day MA. That line was reclaimed on Monday and gold closed above the 50-Day line each day this week. That is a sign of strength, indicating the potential for an upside continuation. However, a signal is needed and that would be provided by a decisive rally above this week’s high of $64.22. Subsequently, a new bullish continuation signal would be generated on a rally above an initial swing high of $64.67 (B) from May 19.
Bull Breakout on Weekly
A bull breakout on the weekly chart triggered on Monday as last week’s high of $53.43 was exceeded. The breakout was confirmed on a daily basis and it will be confirmed on a weekly basis if Friday’s closing price is above that higher. That would be another bullish sign, and on the more significant longer time frame. A confirmed weekly breakout would put crude oil in a good position to challenge the May swing high.
Higher Potential Targets
The first rally from the April trend low found resistance at a high of $65.32. That was around a prior long-term support area. However, that price level should be exceeded if a breakout above the May swing high triggers, as bullish momentum has been building during consolidation. An initial key upside target is the confluence of two price levels. The 78.6% Fibonacci retracement is at $68.79 and a rising ABCD pattern points to $68.98.
There is also the potential for higher targets as there are two potential bullish patterns that could trigger. A potential double bottom reversal pattern would trigger on a rally above the April high of $65.32. Contained within the pattern is a more recent potential bull flag pattern. The flag would trigger on a rise above this week’s high.
For a look at all of today’s economic events, check out our economic calendar.