The Gold price has stayed in a range around the 1500 handle ahead of big market triggers. The following looks at what could happen next based on the Elliott wave theory.
August 20, 2018 | AtoZ Markets – The precious commodity has been non-directional since it fell from 1535 and rose from 1480. Price has now stayed within these two levels for nearly a week. The yellow metal remains upbeat and could hit higher prices in the coming days. Meanwhile, it might stay for a longer time oscillating between these two extremes. Breaking away from any of these levels will most likely determine the short term direction of the metal.
The big surge since August 2018 was buoyed by the US-China trade spats. Toward the end of the year, the two countries signed a truce. After this, an agreement was not reached and the conflict continued. Gold has benefitted as a safe-haven commodity from the conflict. However, from the technical perspective, the Gold price is around a reversal zone and might soon start the biggest dip since late 2018. President Trump’s withdrawal from imposing more tariffs on China and his latest tweet that suggested discussions have commenced might be the foundation of a deep bearish correction.
Gold analysis: important price levels
To the upside, price is just below the 1500-1550 reversal zone. However, it might retest the 1535 top and hit the 1500 diagonal level. To the downside, 1480 remains the nearest support level. Below is the very important 1451 support level which is expected to act as mighty support for the next bullish push. However, a breach downside will most probably lead to a hit of the 1400 handle.
Gold Elliott wave analysis
Since the price dropped from 1535, we have been expecting a corrective dip either below 1480 or just above it. It depends on the corrective pattern that completes. A zigzag corrective pattern below 1480 or a triangle pattern just above it are the two most likely scenario. In the last update, we used the chart below to show how the zigzag could end around 1468-1470.
Wace (c) has not proceeded just as expected but price remains within the range. Therefore, the scenario above is still very much alive. Alternatively, the chart below shows a possible triangle wave 4 (circled).
A triangle wave 4 between 1525 and 1480 could complete at prices close to 1500 before a bullish launch to 1550.