Gold Elliott wave analysis: complex bullish correction continues above 1520

Gold rallied above 1520 at the start of the new week. Is the metal close to a reversal zone? The following technical analysis is based on the Elliott wave theory.

September 23, 2019 | AtoZ Markets – The yellow metal surged at the end of last week trading activities. The metal quickly recovered from the Fed statements which saw it hit 1484. The price bounced off the support zone and the bulls pushed to 1520. The bullish correction continued today with a minor gain to hit above 1525 high. The highest price in September remains at 1557 and it remained to be seen whether this bullish run is strong enough to knock off this level. On the other hand, the current rally looks correction and the larger bearish correction might continue below 1480.

The Fed came out hawkish in the last meeting but the bank left the market to take care of itself as far as the nearest future is concerned. The US-China trade situation and other geopolitical events remain the major drivers of this commodity over the last one year. The long term trend remains bullish while the short term bearish correction is losing ground (at least for now). Aside from possible trade talks highlights that might come any time, there are few high impact USD economic data to look forward to this week. The chief among them is the quarterly US GDP data.

Gold analysis: important price levels

Resistance Levels: Price has broken above the minor resistance levels at 1512 and 1523 and now looking forward to the September top at 1557. In addition, the current level around 1525 might also offer a major reversal.

Support Levels: Before the 1400 handle, 1485 and 1451 are the critical support levels.

Gold Elliott wave analysis

In the last update, we looked at the current short-term bullish move that started nearly two weeks ago from 1484. We figured a bearish correction was ongoing and had two patterns in mind as the chart below shows.

Gold price action violated the triangle structure and we are now left with the complex zigzag pattern which also looks like a flat pattern as shown by the new chart below.

The first confirmation is to wait for a break below the wave (x)-(y) trendline (broken blue). The breakout could find minor support at 1500 or prices above and then a bounce toward 1520 might follow. If a pullback happens, speculative sellers might look for orders after the second breakout (breakout below the first swing) as the chart above shows. If the breakout is fast, it’s an indication that the bearish correction will continue to at least the 1484 support level. Other bearish targets are 1451 and 1400 levels


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