Gold, from a short term indication, could rally further to cap a positive week. A rally toward 1325 is very likely as shown in the 31 May Gold Elliott wave analysis below.
At the beginning of last week, Gold completed an important wave pattern. In the previous week, we saw a 350-400 Pips fast drop after price completed a wave-iv double zigzag pattern. Elliott wave identifies trends as motive waves – impulse waves and ending diagonals, and corrections as corrective waves -Zigzag, Flats and Triangles. All having its unique structural build-up and market forecast interpretations. When this wave pattern completed, we expected price to make corrective rallies. In the last update, the chart below was used.
The ‘Inverted Head and Shoulder’ reversal pattern is just completing the last leg of the larger bearish corrective wave suggests price would rally once the neckline is broken upside. Above 1297, we will likely see Gold soar toward 1325 level. Unless a fast drop back to the pattern zone, below 1290, Gold should trade at higher prices in the coming days and weeks.
There was a confluence of two price reversal patterns just at the end of wave (v) of the bearish impulse wave. Price broke above 1297 as expected and above 1300 as the bullish move gathered some needed momentum. The rally, however, is corrective as shown in the chart below. If this corrective bullish move continues as expected, there is a chance that price would not bridge above 1325 top before dropping again.
31 May Gold Elliott wave analysis: what next?
Price would possibly complete a corrective bullish Zigzag around 1325. Wave a) is an impulse wave while wave b) is sideways completing a triangle pattern. Triangles are known to precede the last leg of a wave pattern (trend or correction) before price turns in the other direction. If price breaks above the B-D resistance line, we should expect the rally to continue to 1325. If price breaks above, the correction would end up more complex. But, if price is resisted below 1325, it could drop having completed a simple Zigzag pattern to continue the bearish intermediate trend. Stay tuned for the next update.
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