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.

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

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