The Gold price has hit its highest in the last nine months after breaking an important resistance level. What next? The following give insights based on Elliott wave theory.
February 21, 2019. | AtoZ Markets – Gold has continued the bullish run from 1160, emerging into an impulse wave. The commodity is aided by a weakened dollar after the dovish comments from the FED since late December 2018. This year has been bullish so far after a smooth rally in January which saw price hitting 1326. February however, started on the downside as price made some retracement from 1326 resistance level. The dip was corrective and saw price nearing 1300 three times before continuing upside. 1300 is now a very strong support level which might be tested when next price makes a big dip.
Price resumed upside from 1302 last week and broke above 1326 resistance very easily. From 1326, the precious metal gained about 1.5% to hit 1347 – its highest price in the last nine months. From Elliott wave perspective, price should continue to 1360-70 after the next dip. Meanwhile, the rally was interrupted after yesterday's FOMC meeting outcome which saw the dollar gained a bit. How far can the current dip go?
Gold Elliott wave analysis and important price levels
After price broke above the 1326-1302 corrective dip, the road was clear for a bullish run above 1326. In the previous updates, we expected the 4th wave of the impulse wave rally from 1160 to drop below 1300 into the 1298-1277 territory. Price rejection to break below 1300 was confirmed by a triple bottom formed just above 1300 and the upsurge that followed. The following chart was used in the last update.
The break above 1315-1318 intraday resistance zone confirmed the 4th wave has completed just above 1300. After this update, the price continued upside and gained about 250 pips more. What next? The chart below shows the new update.
The 5th wave started from 1302 after a very shallow 4th wave ended at 1302. Sub-waves iii of the 5th wave might have ended at 1347 and the current dip, which is the sub-wave iv of the 5th wave, might continue downside with support at 1329-1326. A new bullish wave is expected to start from this zone if this wave count is correct. A fast dip below 1326 might force us into a new outlook.
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