Gold has recovered after a sharp dip below 1500. The following looks at what could happen next based on the Elliott wave theory.
August 16, 2019 | AtoZ Markets - The yellow metal has gradually climbed above 1500 in the last two days. The commodity quickly dropped to 1489 from 1535 after the US delayed tariffs. However, the demand for the yellow metal has not dropped although the price might be close to a big bearish correction. The metal has been a bit bearish today, dropping below Thursday's close of around 1520 and now at 1513.
There is no high impact news in the economic calendar today. However, new headlines could surface that could cause a big move before the week ends. Besides any surprises, the broader market sentiment should prevail. There might be a minor dip back to 1500 before the end of today. Price is currently at the 1500-1550 technical reversal zone but there are not yet bearish signals of note. The price might continue sideways between 1489 and 1535 or dip slightly below 1489 before the bullish trend resumes.
Gold analysis: important price levels
To the downside, 1489 is the nearest support level. If a massive dip happens below, we should see a hit of 1575. If the bull will continue the immediate trend, price should stay above the 1451 support level. The upside is a bit limited. The metal is a bit overbought and might start a bearish correction soon. Gold price still struggles to stay above 1500. If the 1535 resistance is breached upside, we should see a hit of 1550.
Gold Elliott wave analysis
In the last update, we reckoned that the bullish trend is at the 1500-1550 reversal zone. An Elliott wave pattern is close to completion as the chart below, used in the last update, shows.
Wave 4 of V of (C) is ongoing. The formation is expected to be any of the three main corrective patterns - Flat, Triangle or Zigzag. The chart below shows that wave 4 (circled) is still ongoing.
As the chart above shows, wave 4 (circled) could be a zigzag with a dip to 1475 or a triangle pattern oscillating between 1535 and 1489. Wave 5 (circled) should continue upwards afterwards to complete the larger pattern. At least, a 3-wave bearish correction should follow to 1400 afterwards.