A strong Dollar today, has seen prices of Gold drop. How far will the drop go? The following 17 July Gold Elliott wave analysis looks at the technical forecast of XAUUSD based on Elliott wave theory.
Gold continues the bearish run this week after a minor bullish correction last week. In the last update, we had expected price to drop but the decline was expected to be limited around 1244-1246 as we looked at the possibility of an expanding Flat corrective pattern. Flat patterns are difficult to spot in real time. They are the least reliable of all the corrective patterns. Reason being the ease with which they quickly get invalidated. The expected Flat pattern was invalidated by price. The pattern is shown in the chart below as used in the last update.
The chart above shows the correction that followed wave i or a) rally might not have completed yet. There is a likelihood of an expanding flat pattern. If the last leg completes as an impulse wave around 1246, we might see it continue the bullish corrective run to 1270-1280. Of course, flat patterns are difficult to spot in real time and are often transformed into a different pattern, so it will be interesting to know how this will play out.
17 July Gold Elliott wave analysis:what next?
Price dipped far below 1244. It went close to 1230 and here is the new update.
The chart above shows two scenarios. The first scenario in green, shows the emergence of an impulse wave which suggests, if there is a break above the impulse wave wedge, we should see a bullish corrective move up to 1270 or slightly above before the dip continues. The second scenario in red suggests the drop could be a zigzag pattern and we should expect a fast impulsive rally to the 1270-1307 space. The first scenario is more likely. In the two scenario, a bullish move is imminent if price is contained above 1220 and break above the wedge. If that happens, a rally to 1270 or more is expected. Stay tuned for the next update.
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