January 09, 2019 | AtoZ Markets - Gold almost hit 1300 last week but has now stayed below it for some days now. On Monday, it dropped about 1.1% to hit the lowest price this week (so far) at 1281. There was about a 60 Pips rally yesterday as price recovers some of Monday losses. Today, price has resumed downside but with little momentum and currently at 1282. This one week of price action has seen a reversal top pattern printed on the chart. This might signal further drops to 1259-60 important Fibonacci support level.
In the past updates, we have looked at two scenarios. Recent price activities of this metal shows price will correct downside before the bullish move from 1160 continues. The extent of this dip is up for debate. The depth of the bearish correction will also determine if any of the long term scenarios would be favored or price would resume bearish. The chart below shows a reversal top signaling the continuation of the bearish correction.
Gold Elliott Wave Analysis and Important Price Levels
The chart above shows a reversal head and shoulder top. This pattern is well known to precede the start of a new trend or a correction. By projection, if price moves accordingly and break below the 1277 neckline, the target should be at 1260 which also lies at the 38.2% Fib-retracement of the preceding upswing. 1300 still remain the vital psychology resistance level. Only a fast break above it would invalidate this bearish scenario. However, the drop is expected to be corrective and supported at 1259-1260 to trigger the first scenario of the last update. A fast dip below 1259 would see price heading to retest 1250 thus, the second scenario would work better.
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