Bottom line: Gold might have produced a meaningful top at $1611 or could print yet another high around $1620 levels before reversing sharply. It is good to sell on rallies.
Technical Analysis:
Gold seems to be in control of bears after having printed a potential meaningful top at $1611 on January 08, 2020. Looking at the lower degree waves, the yellow metal has produced a 5 wave drop from $1611 through $1540. Furthermore, an expended flat corrective wave might have terminated around $1592.00 last week. If the above counts are correct, a steep reversal should be on cards towards $1500 and $1450 levels respectively, taking out major support. Please note that this could be the beginning of a long term price reversal and has got potential to terminate below December 2015 lows ($1046.00). Looking at the larger wave counts again, Gold was in a multiyear counter trend rally since $1046 in December 2015. A larger degree (W)-(X)-(Y) was in the making with wave (X) unfolding as a multiyear triangle structure, which terminated at $1262 in May 2019. Since then, wave (Y) has been unfolding and produced a 5-3-5 structure. Wave A terminated at $1557, followed by Wave (B) at $1450 and finally Wave C potentially terminated at $1611. Please note that fibonacci 0.618 extensions are still pointing towards $1622 levels for Wave C termination and we shall remain prepared for that. Trading point of view, it is safe to sell on rallies through $1585 against $1611 for now, with potential price targets below $1500 mark. A break below $1562/63 would also break the counter trend line and confirm that a lower top is in place at $1592 last week. Prepare for a bearish reversal in Gold, either from here or a marginal high above $1611 levels.
Prepared by
Harsh Japee, Technical Analyst.
Gold Chart
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