Wednesday was a mellow day in gold, but in this context -- coming right after a fresh breakout -- it was a potentially significant day. The big danger in this type of pattern is a sudden reversal after the breakout, but instead of that it looks like gold is embarking on a sustainable move higher.

I still think it would be a better for gold to come back down and get the necessary 38.2% retracement out of the way as quickly as possible. This would involve a move back down to test the $1,442 level, and an easy rebound off there. Such a test would "set-in" the breakout pattern and allow gold to proceed higher without much lingering trouble.

The big fractal energy levels for this pattern are right at $1,462 -- where prices hit the wall on Wednesday -- and then up around $1,500. I think $1,462 will provide a formidable barrier to further upside in the short-term, so that's why I'm favoring a rather quick retracement in this situation back down to $1,442.

Thursday is also Day 11 for the new timing cycle, which is a spot where quick reversals can take place. In the strongest patterns these reversals can happen in both directions on the same day. So a quick drop down to $1,442 and a rebound there would leave a perfect Day 11 reversal behind on the chart, and would likely free up gold to move higher into Day 21 in a few weeks time.

As I mentioned yesterday, I'm still just talking about the shorter-term bullishness of this chart, as I still have major doubts about the ultimate sustainability of a move higher. Another way to look at this is that it is highly likely that gold will provide a better opportunity for buying at some point in the future, and probably a much better opportunity, too. There may be some better selling opportunities in the near-term, but as a long-term buy this is not a prime set-up for gold.

However, I do think a trader's mentality makes sense on the long side, as the later stages of a growth pattern can get very energetic, with prices moving huge distances in a short amount of time. Gold has not shown many signs that it wants to move into such a blow-off top, but it's wilder sibling silver is doing just this, and gold may get sucked up into the vortex too.

One big problem for gold in a blow-off top scenario is that it will likely spell the end for the long bull market. This is one of those cases where gold bulls should be careful what they wish for. It would be much better for the long-term health of the growth pattern to see a typical 38.2% retracement, which would lay the foundation for a move up to much, much higher levels 3 or 4 years from now.

This bigger retracement is still a possibility, of course, so we will have to wait and see if gold goes wild to the upside over the first 64 days of this new cycle, into June. This would be a thrilling ride in the short-term, but ultimately not a good thing for the long-term.