Gold – Flag Projection in Sight as Rally Goes on

Gold has rallied strongly again today to trade at a five week high, breaching $1,150 in the process before running into resistance at the 50 fib level – 18 May highs to 20 July lows.

Gold Daily

Given the longer term decline that the yellow metal finds itself in, it would not be a surprise to see a reversal at this level and continuation of the down trend. However, as highlighted yesterday (Gold – Bullish Flag Broken Ahead of FOMC Minutes), there could be some more upside following the break of the flag formation.

This is supported by the fact that price has consolidated since it ran into the 50 fib resistance, which is often a continuation signal.

Gold 4hr

If we see another rally through the 50 fib off the back of this, we could see a move towards $1,164, the projection level highlighted in yesterday’s article. This is based on the size of the flag pole – the rally prior to the consolidation – projected above the flag, as noted yesterday.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.