Is the gold price poised for a breakout? Market analyst Henry Stater says technical and geopolitical factors align and is assessing the impact this has on gold.
A “cup and handle” pattern is forming on the gold chart
With gold hovering around the psychologically important $2,000 price level, an exciting technical indicator appears to be emerging, signaling a potential bullish run for the precious metal. A bullish pattern known as a “cup and handle” may be forming on the gold price chart, and it could herald a new growth period for the safe-haven asset. This article discusses what this pattern usually means, how it may affect gold prices in the near and far future, and how the current geopolitical environment can further enhance gold’s potential success.
The cup and handle pattern is a chart pattern that resembles a tea cup followed by a smaller handle sloping down. This pattern is generally considered bullish as it indicates that the price of an asset is preparing to climb to new highs after a period of consolidation. Looking at the picture given above, you can see what looks like a cup formation on the price chart of gold. Analysts, including Jordan Roy-Byrne, draw attention to the important signs of the formation.
The $2,000 price level has historically acted as a resistance level for gold. But if the cup and handle formation happens as expected, it could turn into an important support level. As Byrne noted in his latest article, some analysts predict that gold could reach $4,000 by 2025. If this pattern continues to develop and gold successfully breaks the $2,000 resistance level, it could be a strong indication that the metal is entering a new bullish phase.
A perfect storm can occur for yellow metal!
Technical analysis is not foolproof and should be used in conjunction with other factors such as the geopolitical context and Federal Reserve policy to provide a more comprehensive view of the market. With that in mind, let’s examine the current geopolitical environment and how it can further support the potential success of gold.
High interest rates, the recent banking crisis, and Pentagon document leaks exposing America’s suspicions of Ukraine’s planned spring offensive are just three of the biggest contributors to global unrest at the time of this writing. When events like these shroud the future of the global economy with uncertainty, investors often turn to gold as a hedge against potential market volatility. The combination of gold’s bullish technical formation and the unstable geopolitical situation could create the perfect storm, paving the way for gold’s upward momentum.
However, there is no guarantee that this will happen. The handle of the cup and handle pattern may not be fully developed yet, so traders should watch the price chart of gold over the next few days and weeks. If analysts are right about the cup and handle formation, the price of gold could drop significantly before it quickly starts to rise, potentially providing an excellent buying opportunity. cryptocoin.com As we always say, it is very important for investors to do extensive research and consider their risk tolerance before making investment decisions.
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