Gold had a bullish continuation breakout to 1452 on Thursday. Will the metal rally further? The following technical analysis is based on the Elliott wave theory.
July 19, 2019 | AtoZ Markets - On Thursday, it was another big day for the Gold bulls. The yellow metal was pushed above the 1439 resistance level to 1450 and slightly above. 1439 resistance level was created on June 24 and price swung sideways for three weeks below this level before yesterday's quick breakout. On Friday, however, the price is retreating back to 1439-1438 critical price zone but the bulls remain in control of the zero-yielding commodity.
The greenback was seen losing some strength on Thursday after news of a prolonged trade war between US and China surfaced. The usual retaliatory headlines of President Trump threatening to return tariff burdens on Chinese products could weigh on the Dollar. In addition, the expected Fed rate cut in the next FOMC meeting could reduce the demand for the buck and send the prices of the dollar-denominated Gold further upside. Meanwhile, FOMC members Bullard and Rosengren will speak today in New York at the annual meeting of the Central Bank Research Association.
Gold technical analysis: important price levels
Gold completed a bullish pennant yesterday or simply a bullish triangle structure before finally breaking upside. The 1439-38 zone was broken upside but the breakout is not yet significant enough and the price could easily creep into the pattern territory. Above the level is the 1454 Fibonacci critical resistance level which was almost hit before the current minor dip to 1435. The main bullish target is the 1500 handle. To the downside, the price will have to break below the 1400 handle to return to the 1375-1368 support zone.
Gold Elliott wave analysis
Gold is clearly bullish since August 2018 when it started the current rally from 1160. A bullish impulse wave is emerging. In the last update, we labelled the 3-weeks sideways dip below 1439 as the 4th sub-wave of wave 5. The chart below was used.
The wave E dip was very shallow. Price didn't go below 1415 before breaking upside. The triangle was going to be considered complete anyway if the price breaks above wave B high. The chart below shows a little adjustment.
Wave 5 is ongoing and could extend to 1500 handle. Only a fast dip into the triangle territory might invalidate this forecast. The commodity is expected to maintain the bullish trend in the short term.