Charting the Gold Trendline Breakout and Trade Target Levels

Oct 23, 2013: 1:34 PM CST

With Gold breaking free of its falling wedge or flag trendline pattern, upside trading targets are now in play.

Let’s start with the Daily Chart and note the breakout and potential target levels should gold indeed hold above its breakout levels.

Here’s two perspectives on the Daily Chart levels:

Gold Daily Chart Technical Analysis Pattern Breakout Trendline Upside Targets Reversal

As we’ll see from the chart below, price also broke free from its “squeeze” play between the 20 and 50 day EMA near the $1,325 per ounce area.

We also note the spike or rise in bullish volume along with the recent upside movement – that tends to be a sign of confirmation.

Finally, a positive momentum divergence in the 3/10 Oscillator also preceded the reversal up off the $1,250 level ahead of the trendline and EMA breakout.

As for targets from this perspective, the falling 200 day SMA intersects the September ‘spike’ price high into $1,425 which is a logical upside target for traders.

We see similar information on the “Fibonacci” Chart of Gold below:

Gold Fibonacci Trading Targets Breakout Key Levels Daily Chart Technical Analysis

There’s a more sophisticated target into $1,420 which is the 38.2% Fibonacci Retracement of the decline as drawn.

The same level also reflects a swing high price from June 2013 along with the September high.

Note the colored grid – the expectation is that gold can trade up to $1,425 if it can ‘hold’ (stay above) the $1,300 level.

If not, gold again turns bearish with a downside target toward then perhaps under $1,250 on a failure (bull trap).

Gold 30-min Fibonacci and Wedge Breakout Chart:

Gold Hourly Intraday Chart Breakout Fibonacci Trade Targets

For short-term traders, use the chart above for the key reference for short-term trading parameters.

The initial breakout above the $1,300 “round number” price level corresponded with the break above the falling “wedge” or flag price pattern trendline.

Yesterday’s upward impulse toward the $1,340 level helped to confirm the breakout, although price (sellers) stalled into the 50% or “halfway” Fibonacci retracement level ($1,343).

Today’s session is a downward movement away from this level.

The key short-term levels to watch would be the $1,320 level which reflects the 38.2% upward Fibonacci Retracement and the low of the prior sessions.

A breakdown under the $1,315 level suggests that the breakout could be a failure and would put $1,300 then perhaps $1,250 back in play as “surprise” or “pattern failure” targets.

Otherwise, a valid breakout should hold above the $1,320 support level and trade back above the $1,343 level of yesterday’s spike high.

If so, it opens additional upside targets mentioned on the Daily Chart  along with the nearer-term 61.8% Fibonacci retracement into $1,363.

A clean future break above $1,365 suggests gold would have strong odds to continue its breakout impulse toward the $1,400 and $1,425 upside targets.

Continue following short-term target levels in the context of the Daily Chart breakout and upside targets.

I’ll be discussing breakout, retracement, and reversal trading tactics live at the Las Vegas Traders Expo on November 22 – join me and your fellow traders at the free expo!

Corey Rosenbloom, CMT
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Corey’s book The Complete Trading Course (Wiley Finance) is available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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