Gold Price Analysis: Yellow metal forms a bull pennant

Gold's recent consolidation has taken the shape of a bull pennant.
A breakout would imply a continuation of the rally from lows seen in March.

Omkar Godbole FXStreet Contributor

Gold looks to have formed a bullish pennant pattern on the daily, which comprises trendlines connecting higher lows and lower highs.

The compression essentially represents a bull-bear tug of war. It is considered a bullish continuation pattern if its formation is preceded by a notable price gain, which is the case here.

The yellow metal rose from $1,455 to $1,747 during the three weeks to April 14 before carving out the contracting triangle. Such pennants usually end up paving the way for a stronger rally.

A close above the top end of the pennant at $1,720 would imply a continuation of the rally from $1,455 and put the focus on the 2020 high of $1,747 clocked on April 14. On the flip side, a move below $1,681 would confirm a pennant breakdown or a bullish-to-bearish trend change and expose the 50-day average support at $1,650. At press time, the yellow metal is trading in a sideways manner around $1,695 per ounce.

Daily chart

Trend: Neutral

Technical levels

1. R3 1732.17
2. R2 1722.25
3. R1 1709.9
PP 1699.98
1. S1 1687.63
2. S2 1677.71
3. S3 1665.36

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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