What an incredible run in the gold market. Let's get things straight: this is a short squeeze of epic proportions. The trend channel, which has determined support and resistance in an extremely accurate way for three years, is close to be invalidated.

As seen on the chart, the price of gold exploded from support through resistance in just one month.We admit, we did not see that coming, at least not so aggressively.

Where does gold go from here?

First, gold should stay three days above $1,220 for a confirmed breakout. Given the recent buying pressure, that target is certainly likely.

But, the more important question is till which point will gold retrace? Profit taking will take place, undoubtedly. We look for one very important price level, i.e. our critical 90 week moving average, which comes in at $1,130. Linked to that, the 90 WMA shows a first attempt to slope upwards, which is incredible news for gold bulls.

The key question is whether gold can stay above its 90 WMA after retracing. If that would occur, we believe the gold bull market is continuing.