Gold dropped fast yesterday and continued today after an initial effort to break upside failed. The following 5-7 April Gold Elliott wave analysis looks at XAUUSD technical forecast based on Elliott wave theory.
05 April, AtoZForex – Gold dropped yesterday and today and could get to 1300 if it continues bearish in the coming days. When Gold completed an important corrective pattern last week, we thought a rally would burst toward 1400 after price completed a 5-wave up and 3-wave down. I had my suspicion in the way the 3-wave happened. It came so fast and looked similar to an impulse wave. In the previous update, I shared how I would trade that scenario. First was to confirm price made a 3-wave down and then buy the pullback. Price did exactly and made about 150 Pips upside before dropping so fast into the ‘war’ zone.
In the last update, there were two levels I was watching – 1344 resistance and 1328 support. A bridge below 1328 could invalidate the bullish setup. The chart below was used.
Price did exactly as expected and if it rallies further, this would be a very good decision. A break above 1344 should be enough to confirm the beginning of a new bullish impulse wave which could extend to 1375 and beyond. Only a sudden break below 1328 would destabilize this wave count and a break below 1321 would invalidate it.
There was a little bridge above 1344 to 1348 but couldn’t be sustained as price dropped below 1328 support. What next? The following looks at two scenarios.
5-7 April Gold Elliott wave analysis : alternative scenario
This scenario goes with the last update despite price broke below the 1328 support. Wave 2 has not gone below wave 1 yet, so a bullish impulse wave is still possible to continue and break above the new high at 1348. I think this would be suitable as an alternate wave count as price could still move anyway. This wave count is not invalid yet. Below is my preferred wave count and trade idea looking bearish.
5-7 April Gold Elliott wave analysis : preferred scenario
I think price is more likely to go downside next week. I started a new wave count downside as the rally to 1348 was labelled corrective. Price making a 3-wave correction below 1344 and then turn downside is my expectation. This could be tricky especially if the next rally is very strong and doesn’t look corrective. Stay tuned for the next update to know what I intend to do next.
Do you have other views in contrast to the ones listed or you want to compliment them further? let’s know by your comment below.
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