Gold Elliott Wave Analysis: Bullish Breakout Resisted Below 1240

Tuesday's Gold bullish breakout was limited below 1240. Price quickly dropped to 1131 as a selling pressure looks to gather momentum.

October 2018 | AtoZMarkets Gold broke upside yesterday to hit 11 weeks high. The move was cut short at 1238-1240 level resistance zone. A break above this level would have probably seen more rally to 1245-1250. After being resisted at this level, price was pushed back to 1231. Since last week, we have been looking at the possibility of the end of the 4th wave of the year-long bearish impulse wave. With Gold price dropping below 1233 (last week high), there is a chance that the expected 4th wave has ended. Here is the year-long impulse wave.

Gold Elliott Wave Analysis - Long Term View

The bearish impulse wave from 1365 looks impulsive. The rally from 1160 in mid-August looks corrective and most likely the 4th wave of the bearish impulsive trend. Often times, 4th wave retraces to 38.2% of the 3rd wave of the same degree. 38.2% of wave 3 falls at 1238. A big drop might start soon as the 5th wave gets on the way. If price follows this forecast, it should drop to 1140-1120 in the long term. The chart below shows the internal waves of the 4th wave.

Gold Elliott Wave Analysis - Short Term View
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Price broke out of the triangle pattern yesterday. Triangle is known to precede the last leg of a motive (trend) or corrective wave. The rally to 1238-1240 might just be the last bullish leg in wave 4. Price is expected to drop into the triangle zone and break downside below 1208-1214 support zone. If this forecast plays out, price will most likely hit 1200 before a bullish correction. The ultimate bearish target for this forecast is 1140 and 1120. The forecast will be invalid if price breaks above 1240 significantly. This means the 4th wave will be more prolonged than expected.

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