A Trend Up since March's Lows Indicates Higher Prices

However, gold's upward trend from the lows in March is still there and indicating higher prices. Coming off the bottom of the pennant pattern's (little triangle) bottom, it is above both the 21-Day EMA and the short uptrend line. The 200-Day EMA support zone saw price decisively rejected prior to the pennant, which was preceded by an 11.1% surge in only eight days.

Given the 200-Day line's long-term character, this behavior is long-term bullish. It also points to underlying strength in gold, which started to emerge once again after a bullish breakthrough of the pennant last Tuesday. At that time, momentum began to build but paused on the second day of the breakthrough, causing a drop.

Bullish is a shallow retracement

On Monday, with a low of 1,982, the retracement thus far from the high of last week of 2,032 found support at the 23.6% Fibonacci retracement line. As gold surged to a four-day high before falling back down intraday, price then recovered and signaled a positive turnaround today.

Near-Term Short Trendline Support Is Critical

The low of each day over the previous two days nearly exactly touches the short uptrend line off the bottom of the pennant, indicating trend support. This line may thus be utilized moving forward as support for the current trend. A break below the line is a precursor to weakness, but a daily closure below the line is a more compelling warning that bearishness is escalating. The brief uptrend line should stay as support, at least until gold moves above the trend high, if the bull pennant is to keep acting as anticipated and in a clearly positive manner.