Gold Elliott wave analysis after Iran’s attacks on US forces

The Gold price hit 1612 early on Wednesday after the confirmation of Iran’s retaliatory attacks on US airbase. The following looks at the Gold Elliott wave analysis as market participants panic over a possible war.

January 08, 2020 | AtoZ Markets – Risk appetite dropped further on Wednesday during the Asian session as Iran government retaliated the assassination of its top army general. Iran army fired missiles at the U.S forces base in Iraq and has demanded the removal of the US troop from the region. Gold price surged to 1612 (its highest price in nearly 7 years). Stock market and Oil prices whipsawed while CHF and JPY fell back after sharp rallies. So far, the market has absorbed the attack quite well. However, what is to come is not quite certain. Gold has now dropped to its Tuesday’s high around 1585 which is significantly above the 1550 critical support level.

Meanwhile, President Trump’s reaction has been soft so far ahead of more statements expected in the coming hours. The response from the US will determine whether this will grow into a full-blown war. More probably, the US might come with much stricter sanctions on Iran and probably a round of fresh targeted attacks. The risk-aversion atmosphere should drive Gold price higher.

Gold Elliott wave analysis

The current market environment suggests more rallies for the yellow metal. Moreso technically, the bullish trend remains strong. From the Elliott wave perspective, a bullish impulse wave pattern is emerging from 1047 in December 2015. It now looks like the current rally is the 3rd wave of this bullish impulse wave trend. The current bullish drivers are strong and typical of a 3rd wave move. In the last update, we used the chart below (Charting tools from TradingView).

The strong bullish run from 1160 is the 3rd primary wave. In the last update, we expected wave (5) (intermediate) to extend to 1690 or even 1800 while the primary wave 3 could hit 2000. The new chart below looks at the sub-waves of the emerging wave (5).

Gold Elliott wave analysis

As the chart above shows, wave 3 of (5) is still emerging. The next dip might continue to the 38.2% (1553) Fibonacci retracement of the 3rd sub-wave (minute) of wave 3 (minor). With the strength of this bullish trend and the current risk sentiments, it seems the most likely outlook for retail traders is to buy dips. Until the end of the wave 5 of (5) or wave (5) itself, we might not see any deep bearish correction.

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