Gold has been confined to a trading range since March, with support at the 1,220 level and resistance in the 1,295 area. For the past week, prices have been attempting to move above the 1,295 resistance level. This is the third breakout attempt, and the character of price behavior during the last 8 sessions suggests that there is a good chance the attempt will be successful.
If the breakout is successful, the target of the initial advance will be the width of the trading range above the resistance area. Therefore, a close well above the 1,295 level would predict a relatively quick move up to at least 1,365.
Trading range breakouts and breakdowns nearly always result in strong continuation moves in the direction of the break, so it will be important to monitor gold closely during the next several sessions.
