Gold Elliott wave analysis: price retreats below 1439 resistance level

Gold price stabilizes just around 1420 after consecutive rally and decline. The following technical insight is based on the Elliott wave theory.

July 22, 2019 | AtoZ Markets – The yellow metal has dropped into the territory of the symmetrical triangle after dropping below the 1439 level. The triangle which lasted for nearly three weeks finally had a bullish breakout last week to hit 1452 after the market interpreted a larger than expected rate cut. However, this would soon be reverted and the Gold price dropped as the bears push back to 1420.

The USD rose against major currencies last week aside from the commodity currencies which were strong throughout. The fear of a renewed US-China trade disagreement is back on the table and therefore investors might be cautious before the Advanced US GDP data is released on Friday. 

Gold technical analysis: important price levels

From a technical perspective, the Gold price was expected to advance toward 1500 after it broke out of a symmetrical triangle to the upside last week. Price has now dropped to 1420 and might dig deeper to retest the 1400 psychological level. A dip below 1380 could lead to the 1300 psychological level. Meanwhile, the immediate and medium-term trend remains bullish. A fresh rally above 1450 will most probably be followed by a hit of the 1500 level. 

Gold Elliott wave analysis

From the perspective of the Elliott wave theory, the trend is bullish. The current bullish impulse wave rally started in September 2018 at 1160. In the last update, we reckoned that the 4th sub-wave of the 5th wave completed with a symmetrical triangle. The price was expected to push higher to 1500 as the chart below shows.

Price didn’t make a new high. It dropped further to 1420. However, the scenario is not yet invalid as the new chart below shows. 

With the current market picture, there are three high probable scenarios. 

  1. If the price drops below 1400, the scenario above is invalid. Wave v will be considered to have ended albeit very small (almost truncated). A 3-wave dip to 1300 or below is expected.
  2. Wave v might complete with an ending diagonal below 1500. This should give traders the opportunity to consider shorting to 1350 at least.
  3. Wave 5 impulse wave continues to 1500 before the bearish correction starts


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