After advancing to 1457, Gold is about to hit a price reversal zone. The following technical analysis is based on the Elliott wave theory.
August 08, 2019 | AtoZ Markets – The US Non-Farm Payroll for July came at 164,000 just as the market expected. Prior to that, the hawkish Fed on Wednesday caused a spike to 1440. Shortly after the NFP, the yellow metal went sideways, before pushing further upwards just as expected from a technical point of view.
The precious commodity started this week bullish, picking from 1439 to 1458 where it currently trades. The demand for Gold has not dropped since August 2018 when it started the current bullish trend. In the coming days, price is expected to rally to the 1500 handle or drop below the 1400 handle. Which of these scenarios is more probable?
Gold analysis: important price levels
The current rally is expected to be limited below 1462-1465. However, a break above this zone could lead to 1500. On the downside, the price will have to break below 1438 and 1400 to start a bearish correction. The support zone 1375-1368 is the first bearish target and if it goes deeper, could hit the 1300 handle.
Gold Elliott wave analysis
Gold is heavily bullish. However, a bearish correction might be around the corner. A bullish impulse wave from 1160 in August 2018 is close to completion. The 5th wave of this wave pattern is completing an ending diagonal pattern at prices close to 1460. In the last update, shortly before the NFP, the chart below was used to show a bearish scenario.
The diagonal is very close to completion. However, no bearish reversal price pattern has been formed yet. The ending diagonal will be violated at 1470 but the ideal reversal zone remains at 1462-1465. Price is currently a bit below the zone but has hit the roof of the diagonal as the new chart below shows.
If it surges above it and hit 1470, this scenario will become invalid and the price might proceed to 1500. If it drops from here with a bearish pattern, the downside correction could continue to 1378-1365 zone or even 1300.