- Gold breaks through a key resistance near the $1720-22 supply zone.
- The breakout momentum exposes a retest of multi-year tops ($1748).
- Bulls might then aim towards $1775 level, en-route the $1800 mark.
It's Throwback Thursday and we look back to our gold buy recommendation on May 5th. The commodity continued attracting some dip-buying near a support marked by the lower end of a symmetrical triangle, which constituted towards the formation of a bullish continuation pennant pattern on the daily chart.
The yellow metal finally made it through the $1720-22 supply zone and confirmed a near-term bullish breakout on Thursday, setting the stage for a move back towards retesting multi-year tops – around the $1748 region. Meanwhile, daily RSI (14) is still far from being in the overbought territory and supports prospects for another leg higher, possibly towards the $1775 intermediate resistance en-route the $1800 mark.
Any meaningful pullback towards the pattern resistance breakpoint, around the $1720 region, might still be seen a buying opportunity and help limit any further downside. Any subsequent slide is likely to find decent support near the $1700 level, which should now act as a strong base for the metal and considered as a stop-loss level for near-term bullish positions.