Bottom line: Gold potential bearish structure could be in place with $1611 top carved last week. A counter trend rally is expected through $1585, the 61% retracement of above drop.
Technical Analysis:
Gold remains in control of bears after printing highs at $1611 last week and drops through $1536 until this moment. The metal seems to have produced an impulse indicating a much deeper drop, going forward. Looking into the short term structure, Gold has completed 5 waves lower between $1611 and $1540 respectively. Since then, it seems to be unfolding as an expanded flat a-b-c higher towards $1584/85. This has been marked as fibonacci 0.618 retracement of the above drop and hence a bearish reversal remains high probability. Trading opportunities (aggressive and conservative) are being offered on both sides described here. Aggressive trade strategy is to remain long with stops below $1530 and potential upside targets through $1585, while a more conservative strategy could be to remain flat for now and look for opportunities to go short at higher levels. If the above count is correct, $1611 resistance will hold and prices are expected to reverse from around $1585 levels. The overall wave structure since December 2015 lows at $1046 also reveals that the counter trend rally (W)-(X)-(Y) could be now complete at $1611. Please note that Wave (Y) had been unfolding since $1262 lows in May 2019. Wave A terminated at $1557, followed by corrective Wave B towards $1440 and finally Wave C thrust towards $1611 terminated Wave (Y). If the above larger picture is correct, Gold is headed much lower in the coming weeks and months. Also note that any high above $1611 would be short lived and should be seen as a great opportunity to initiate fresh short positions. Initial bearish targets should be seen towards $1445 levels if not further.
Prepared by
Harsh Japee, Technical Analyst.
Gold Chart
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