Gold is seemingly set for higher prices after a solid breakout this week. The following 5-6 July Gold Elliott wave analysis looks at XAUUSD technical forecast based on Elliott wave theory.
Gold broke out of a bearish impulse wave and wedge pattern earlier this week. Price has been up since the breakout. Yesterday, a corrective bearish dip was seen but it seems the rally would only continue. In the last update, we discussed about the similarities a wedge pattern can have with an impulse wave and a diagonal pattern. Price drop from 1309 to 1237 was an impulse wave which also looked well like a wedge pattern. The bullish first target was set at 1280-1290 zone. High impact events are coming and price volatility is bound to follow. From 1237, we will start observing and labeling a potential corrective pattern – probably a zigzag pattern. We will start with an impulse wave (a) of the correction. Is price going in that direction?. In the last update, the chart below was used.
The Impulse wave wedge pattern shown in the chart above ended at 1237 and price is breaking upside significantly. If the pattern would lead to a correction, we should see price at 1280-1290 before dropping again. If the rally looks impulsive, it means the pattern might lead to a change of trend and a break above 1390 is much likely.
5-6 July Gold Elliott wave analysis: what next?
Price dropped from 1261 where the first sub-wave might have ended. Price hit slightly below 1252 (38% Fib-retracement). Once price breaks above 1261, we should see more higher prices up to 1280-1290. Despite this bounce off the 38.2% Fib-retracement level, we might see it drop to test 50% and 62% at 1249 and 1246 respectively until 1261 is broken upside. The FOMC comes later today and the NFP tomorrow, there should be enough price activities to validate or invalidate this forecast. Below 1237, this forecast will be invalid. Stay tuned for the next update.
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