Gold price opened in 2021 with a gap higher, and it seems that the bullish price action is set to continue. The yellow metal formed a pennant formation on the lower timeframes, strong enough to point to the $2,000 level sooner rather than later.
After it made a new all-time high last year, gold corrected even while the U.S. dollar decline continued. That being said, it diverged from the overall decline in the dollar, making many investors wondering what is going on. In comparison, while gold struggled to find a bottom in the last months of 2020, Bitcoin, the digital rival, tripled in value. Perhaps it is time for gold to recover the lost ground?
Gold Price Technical Analysis
A pennant is a continuation pattern. It is formed out of a strong, almost vertical move, followed by a consolidation. The consolidation area is typically a contracting triangle that does not take long to form. On a break higher, the measured move equals the distance prior to the consolidation area projected from the breakout point.
Bulls may want to stay on the long side targeting $2,000 and more with a stop loss at $1,900. While the risk-reward ratio is not so favorable, the pennant reinforces the gold price’s possibility of regaining the $2,000 level sooner rather than later.
Gold Price Forecast
