Trading Nation

The gold chart looks great. Here's my target: Trader

The gold chart looks great. Here's my target: Trader

is rising for a seventh straight day, and according to one technician, the charts are predicting even more gains.

On Thursday's "Trading Nation," Rich Ross, head of technical analysis at Evercore ISI, said bullion is in the midst of creating a key bullish technical formation that could lead to an additional 8 percent rally.

Specifically, Ross says that gold has formed what technicians call a "double bottom" around the $1,140 level. This is important to him because according to his chart work, this formation "should provide a solid foundation for a run higher" and establishes a near-term floor.

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Ross also said that in the very short term, traders need to watch the 100-day moving average, which corresponds to the $1,206 level. Technicians often use moving averages to identify key inflection points, and according to Ross, gold is nearing one. "I think we have what it takes to punch through this moving average," he said. "It's had some success along the way calling the lows and providing support early last year."

Using support and resistance levels

The fundamental backdrop for gold is also positive, Ross noted.

"In recent sessions we've seen a rise in both and geopolitical tensions in the Middle East," he said. "And importantly we've seen the strong ease."

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Assets denominated in the U.S. currency—like gold and oil—often fall as the dollar rises. With the torrid run in the greenback easing, Ross says gold's seven-day winning streak should continue for at least another $100.

"If we are able to get through $1,240, I think it could set us up for a run at old highs coming in at $1,300," said Ross. "Play gold for a trade."