Measured Move Suggests Upside Potential for Gold

Owning gold has required patience these last two years. After surging following the onset of COVID and peaking above $2,000 per ounce back in August 2020, gold has churned in the time since and is currently trading -15% below its all-time highs. As a result of finding support at a critical price zone, the gold trend has turned positive.

Jumping off a key support level, gold initiates a positive turnaround above yesterday's high. There are signs that the small correction's bottom has been reached and that gold is now poised to move higher. Watch for further indications of growth and new optimistic cues going forward. In addition, a decline below this support area (shown below) will be negative.

At the 88.6% Fibonacci Retracement Line, gold found support.

Yesterday's bottom of 1,809.33, where gold found support, marked the conclusion of the 88.6% Fibonacci retracement of the most recent five-day rise. The 200-Day EMA, currently at 1,805.64, a 61.8% Fibonacci retracement level, as well as prior notable swing lows and highs, were all previously recognized support zones that included that low. The bull trend is expected to continue given last week's positive response off the support zone.

Possible Formation of a Double Bottom

A possible positive double bottom trend turnaround pattern may now be developing in the overall picture. The second bottom is formed by yesterday's swing low, and a breakthrough above this week's high of 1,858.33 initiates. Remember that until there is a breakthrough, the pattern is only conceivable and could be a double bottom. Around 1,911 is the traditional counting goal or aim from the design.

If attained, that goal offers significant upside potential and corresponds to the downtrend's 61.8% Fibonacci retracement level at 1,900.51.

the traditional measured move targets 1,911

The present steady advance off yesterday's bottom is of concern. Off the most recent trend bottom of 1,804.68, it is the second step up. The trend's initial run upward began at the low and came to a close at this week's high. If the goal is met, gold will reach 1,863 and will also have completed a 38.2% Fibonacci retracement at 1,863.90. If gold continues climbing, this is a goal zone with a high likelihood.

Higher goal zones should ultimately be achieved, though, given the importance of the recent support zone, the double bottom pattern, and particularly the 200-Day EMA. The first higher goal zone, which spans the range from 1,877 to 1,882 as shown on the chart, was determined using Fibonacci convergence price levels. The double bottom goal at 1,911 and the price region of the 61.8% Fibonacci retracement at 1,900.51 are higher still.