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Gold Elliott wave analysis: price remains under bearish pressure

Sanmi Adeagbo | Apr. 24, 2019
Gold Elliott wave analysis: price remains under bearish pressure

Gold dropped below 1270 on Tuesday. Will there be a re-test of 1280 before further dips? The following looks at what could happen next based on the Elliott wave theory.

April 24, 2019. AtoZ Markets - The safe-haven demand of the yellow commodity has been greatly diluted by more demands for the Dollar in the last two months. The upbeat data from the US with a growing Treasury Bond gains have dragged the non-yielding commodity to its lowest price in 2019 after a break below 1280 significant price level.

Most USD economic indicators are pointing to the upside. The US-China trade deal is coming along well. The stock market is on the rise - the S&P 500 recorded a record close while Nasdaq and DJIA also posted significant gains. The greenback is gaining across the board. Major currencies are falling against the Dollar. Gold is a dollar-denominated commodity and so has fallen significantly since it peaked this year at 1346. How long will this continue?

After dropping to 1266 on Tuesday, Gold is currently making a corrective bullish run toward 1275. The metal is still under bearish pressure which will most likely drag it to 1263 in the short-term or an extended target of 1250. However, there is a big possibility of a rally to retest 1280 important price level. It's also important to know that the current dip from 1346 looks corrective and could be the 4th wave of the larger degree bullish impulse wave from 1160. Once the corrective phase is complete, the price could be pushed upside in this quarter and the next.

Gold Elliott wave analysis and important price levels

From 1346, we have been anticipating a 3-wave dip toward 1260. With the way price has responded, the dip could continue to 1240. Wave (a) and (b) of the corrective dip ended at 1280 and 1325 respectively. Wave (c) could be an impulse wave or ending diagonal. The last update anticipated an ending diagonal. The chart below was used in the last update.

Wave 3 of the proposed diagonal has gone farther than expected and therefore invalidated the pattern. We are now left with the possibility of an impulse wave (c) as the updated chart below shows.

1280 has been broken properly as the 3rd minor-wave emerges. The 4th minor-wave might retest the 1280 level before the price drops further toward 1240. Unless a fast break happens above 1280 into the 1290-1300 territory, the metal is still under the bearish pressure.

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