Gold could move upside next week after it completes an important wave pattern. The following 21-25 May Gold weekly Elliott wave analysis looks at XAUUSD based on Elliott wave theory.
Gold has paused a bit since yesterday after a fast drop this week. At the beginning of this week, Gold started a 350 Pips crash after completing a double zigzag pattern. The double zigzag was the wave (iv) of wave (C) of a larger Zigzag pattern. This shows that Elliott wave patterns are very useful in showing high probable long and short term market moves.
In the last update, we expected the bullish move to resume once price completed the last leg of the larger Zigzag pattern. It seems a lower degree pattern is emerging to confirm this. A lower degree pattern can be used to confirm the larger degree direction. The chart below was used in the last update.
A long term zigzag pattern is emerging as the chart above shows. Wave a (in green) being a leading diagonal, wave b( in green) a Zigzag pattern and the last leg (wave (c) is emerging into an impulse wave. In addition, price is about hitting a rising trendline which could act as a support. If the bearish momentum lasts further, it should break the trendline easily. If price holds above the trendline and breaks above 1297.39, the long term bullish correction should resume, otherwise, a dip to or close to 1236 is more likely.
In the chart above, we expected a break above 1297 to confirm the move upside. With the pattern in the chart below, a lower price than 1297 could be targeted by buyers.
21-25 May Gold Weekly Elliott wave analysis: what next?
Since price hit the rising trendline, it has paused a bit and forming a familiar reversal wave pattern – Ending diagonal pattern. A diagonal pattern at the base of wave (v) of (C) could mean price breaking upside to a least 1308. The next bullish level to watch out for is 1325. If price breaks below the diagonal pattern support line to invalidate it, the bearish move is going to continue as the rising trendline is properly broken. Stay tuned for the next update.
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