Gold has gone range-bound in July. A breakout is expected. The following looks at what could happen next based on the Elliott wave theory.
July 17, 2019 | AtoZ Markets - The yellow metal has continued the bullish trend after being supported at 1382. If the bullish trend would continue, price should advance to 1500. Meanwhile, the precious metal is restricted in a 3-weeks range. The trend is bullish and is expected to continue above 1439. The market will look forward to the US retail sales data and the some FOMC events on Tuesday to decipher where the dollar-denominated commodity will go.
Last week, Gold advanced to 1427 before dropping close to 1400. After failed attempts to break into the 1365-1375 support zone, the price has settled above 1400 and stays within the 1439-1382 territory. Price has started this week bullish after an early rally from 1410 to 1416. Until a breakout happens away from the range in any direction, the commodity will continue without any real direction. How longer will Gold price continue in the range?
Gold analysis: important price levels
To the upside, the most important level is the 1438-1439 resistance zone. If price breaks above this zone, we will most likely see a hit of the 1500 handle. Before 1438 is 1427 which is an important level for short term direction. To the downside, any dip is expected to be limited above 1385. A fast dip below 1385, will most likely see a test of the 1368-1375 support zone.
Gold Elliott wave analysis: triangle pattern emerging
The sideways move that started three weeks ago is emerging into a triangle pattern. The trend is clearly bullish and the triangle pattern could be a temporary 'pause' before price advances further. In the previous updates, we identified an emerging impulse wave from 1160. The dip from 1439 was labelled to be a minor 4th wave. In the last update, we had two scenarios to forecast how the 4th wave could end. The 2nd scenario is playing out better. The chart below was used for the 1st scenario.
Price advanced as expected but lacked enough momentum to cause a big bullish breakout. It looks as if wave iv is emerging into a triangle pattern as the new chart below shows.
The probability of a bullish breakout to 1500 is much higher than a break below the support zone. We will leave the final decision to the price.